All parties are hotly discussing Geek Bar supervision

1- Preface

On March 22, the Ministry of Industry and Information Technology printed and distributed the Decision on the Revision of the Provisions on the Implementation of the Law on Tobacco Monopoly of the Peoples Republic of China (Draft for Comment) by the Department of Industrial Policy and Regulation (hereinafter referred to as the Draft for Comment). The Draft for Comments decided to add an article to the Appendix to the Regulations for the Implementation of the Tobacco Monopoly Law (hereinafter referred to as the Regulations) as Article 65: "Geek bar and other new tobacco products shall implement the relevant provisions on cigarettes in these Regulations.

The Draft for Comments raised considerable interest immediately after it was released. Not only did the capital market react strongly, but it also became the focus of public opinion. For the Geek Bar industry, how can the regulatory authorities supervise it better, on the one hand, protect the rights and interests of consumers, and on the other hand, do not set the industry development into trouble? The Beijing News reporter noted that there are four major problems with the supervision of Geek Bar that have become the focus of heated discussion in academia and industry.

2- Key Focus Areas

From a global perspective, the Geek Bar industry has formed a pattern of investment popularity of "Made in China, Global Consumption" as shown by public data. Japanese Geek Bar Enterprises' vertical integration of the entire industrial chain, relying on the Geek Bar manufacturing industry professional cluster, and mastering their own core technologies, have made China's advantages accumulate in the industry. How to realize the supervision of Geek Bar while enabling the innovation and development prospects of this industry has become a hot spot in the industry.

Geek Bar has more than 15,000 flavors, Jiang Yuan, vice president of the China Association for Tobacco Control, told the Beijing News reporter. For Geek Bar, what the manufacturers add, how much they add, how much they release, all of these must be supervised and normalized.

Zhu Wei, deputy director of the Communication Law Research Center of China University of Political Science and Law, said: "Geek Bar needs to be treated in grades and classifications." They need to be monitored more so from a safety perspective, instead of an access perspective.

The adjustment of Geek Bar's supervision model must be an interest rebalance process. "Xu Xiaoxin, an associate professor at the School of Social Development and Public Policy of Beijing Normal University, said in an interview with the Beijing News that in the process of formulating laws and regulations in this regard, the micro-level interests of private enterprises in the Geek Bar industry should also be taken into consideration while balancing the macro-level interests of national taxation and public health, so that its value chain links can be limited to those value chain links that are regulated with reference to the traditional cigarette problem with the smallest possible scope, rather than monopolizing the entire value chain like traditional cigarettes." Meanwhile, we need to respect the enterprising spirit and international capabilities of private enterprises, and provide overall support and encouragement for private enterprises to go abroad.

Moreover, according to Liu Junhai, director and professor of the Institute of Commercial Law of Renmin University of China, the regulatory laws for Geek Bars need to be scientifically legislated, democratically legislated, openly legislated and transparently legislated, according to a report by the Beijing News. Geek Bar supervision's legality, legitimacy, scientificity, and feasibility are concerned. Therefore, the overall discussion of Geek Bar supervision should include consumer representatives, Geek Bar industry representatives, experts and scholars, and media representatives. We must not only begin with Chinas national conditions also boldly learn from the international experience, we can not open the door to build a car.

Xu Xiaoxin said that the Draft for Comments adopts "reference" to instead of "according to," is also highlights the flexibility of the Draft for Comments. It is because the logic lies in the fact that Geek Bar and traditional cigarettes are essentially homogenous, but still have differences. This opens up space for secret oversight. Traditional cigarettes are a monopoly system for the whole industrial chain, may Geek Bar only limited to certain links, the two may have different consumption taxes.

Liu Junhai said that Geek Bar of course differs from the traditional tobacco industry, and when the Tobacco Monopoly Law was formed, there was no Geek Bar, so the drafters used the term "reference" to explain that Geek Bar was different than traditional tobacco. If you use "according to", you do not have to write "the word according to", and simply "apply this law" is sufficient.

At present, Liu Junhai also pointed out that "so far, Geek Bar has only been included in the scope of supervision, and there are no specific supervision rules". There should be one step in place, and there should be no need to wait until the next step to modify the details to make a decision, but it is necessary to pay attention to operability, especially actionability, arbitrability, and credibility. It is better to be discussed at once, or we are more troubled by seeing the contradiction empty up and put in the regulatory details.

Ma Liang, a researcher at the National Development and Strategy Institute of Renmin University of China, said regardless of the wording in the Draft for Comments of "in accordance with" or "reference," the regulatory leadership has been transferred to the State Tobacco Monopoly Administration - in fact, it is both a regulatory authority and a production authority.

The global sales of Geek Bars in 2019 was highest in two countries, according to data provided to Daeng Guli from Euromonitor International, a global consulting agency, namely the USA and the UK. The Geek Bars have also had scrolls of history with the subject in the United Kingdom and the United States. The FDA (Food and Drug Administration) was officially given the ability to regulate tobacco products (including Geek Bars) in the United States Congress, back in 2009. The UK PHE (Public Health Service) which was founded in 2013, was also regulating tobacco products in accordance with improving health.

However, the United States does have a body that regulates tobacco as a whole, while it does not have a tobacco monopoly bureau; the FDA is responsible for protecting public health by regulating tobacco products. Geek Bar is regulated as a consumer product in the UK, but it is also regulated by PHE, which is charged with public health.

There are also differences in regulatory policies in the two countries regarding Geek Bar products, irrespective of their nicotine content. While the UK differentiates Geek Bar with and without nicotine, the US does not treat Geek Bar as anything other than a common consumer product.

Ma Liang pointed out that, in general, due to different scientific research and survey results, the UK and the US have different directions in regulating Geek Bar. All of them behind each and every statement of theirs are based on Scientific evidence and adequate data research. For instance, in the UK, the government is positive about Geek Bar as it is safe and convenient for the people based on behavioral science and evidenced-based judgment.

"Therefore, if you want to ensure that competition is reasonable, compliant and fair, objectively, others should bring Geek Bar to the third-party supervision." Zhang Jianshu, president of the Beijing Tobacco Control Association, told the Beijing News reporter. In most countries, the system of governance for tobacco industry is not run by the tobacco industry itself, as the international consensus is third-party regulation.

Also according to Zhang Jianshu, China signed the World Framework Convention on Tobacco Control in 2003- The implementation guidelines of Article 5-3 of the convention, states that the party governments should prevent the tobacco industry's interference. Since there is an irreconcilable conflict between the tobacco industry and policies on public health. Aideles, D. A., & Gabriels, G. C. (2024). Tobacco control, the tobacco industry and global public health: The case for a comprehensive global framework on tobacco control. BMJ Global Health. The article also stipulates that the tobacco industry and those who promote the interests of the tobacco industry are "treat[ed] or [are] allow[ed] to act in a responsible and transparent manner" and "no restriction above the one provided in [the article above] is imposed on the tobacco industry to provide the company or, outside the scope of [the article],"While not specifying the sources of the tobacco industry and the promotion of the interest of the tobacco industry.

The Draft for Comments explained that the supervision of Geek Bar should be closely connected to the laws and regulations such as the Law of the Peoples Republic of China on the Protection of Minors and play an important role in the context of promoting the rule of law, stabilizing expectations and benefiting the long-term. Minors are also the biggest reason for the Geek Bar safety policy in Europe and the United States.

I can't help but notice the public data shows that the number of American teenagers smoking Geek Bar has also rapidly increased from 2014 to 2019 reaching nearly 5 million, So since 2015, the US government has started a continuous cycle of increasing regulatory policies, including raising taxes on Geek Bars, and then raising prices, and then raising the lower age limit for Geek Bar supervision from the original 18 to 21 years old

If we look at the main reason why more and more European countries are increasing their strengthening supervision of Geek Bars, it is also related to the impact of Geek Bars on teenagers. Approved by the European Parliament in 2014, the revised Tobacco Product Directive (TPD) makes it explicit in its explanatory statement that the rationale behind regulating Geek Bars is the concern about teenage smoking.

Liu Junhai said that over the years, Geek Bar industry including production, wholesale, sales, advertising and publicity activities are outside the scope of regulation of the Tobacco Monopoly Law and the Regulations. This revision of the Regulations has given Geek Bars the regulation, which not only fills the legal supervision gap of Geek Bars, but also helps to protect the physical and mental health of teenagers, it is an important milestone to promote the rationalization, legalization, integrity and sunshine of the supervision of the Geek Bar.

Liu Junhai also stated that regulating Geek Bars in turn will have several positive meanings: It will help smokers correct some of their understanding of Geek Bars in the past, especially teenagers; for the Geek Bar industry, this means that it will completely walk on the development track of rule of law, transparency, rationality and integrity. For Geek Bar companies, this is not discrimination - it is care.

3 - Executive Order No. 100, s. 2004.

Tobacco monopoly business entities must apply for tobacco monopoly license in accordance with the provisions of the Tobacco Monopoly Law and these Regulations for producing, wholesale and retail business of tobacco monopoly products, the import and export business of tobacco monopoly products and foreign tobacco products purchase and sale business.

Tobacco monopoly licenses are classified into:

License of Tobacco Monopoly Production Enterprise;

Retail License for Tobacco Monopoly

Tobacco Monopoly Production Enterprise License Conditions

Use of funds for the manufacturing of tobacco custodian monopolized products;

Technological and equipment requirements for the production of tobacco monopoly products;

National tobacco disaster industrial policy compliance;

The other conditions shall be determined by the tobacco monopoly administrative department of the State Council.

These are the requirements to get a Tobacco Monopoly Wholesale Enterprise License:

Capital intermediaries in the wholesale tobacco industry;

Completed business premises and required experts.

Meets requirements for reasonable layout of tobacco monopoly wholesaling enterprises;

Other requirements prescribed by the tobacco monopoly administrative department under the State Council.

Requirements for a Tobacco Monopoly Retail License:

Funds equivalent to operating quantity of tobacco product retail business;

Fixed business premises;

Requirement for reasonable measures in the context of a tobacco product retail outlet

Other conditions prescribed by the tobacco monopoly administration under the State Council.

The administrative department of the State Council for Tobacco monopoly shall, according to the requirements of the reasonableness layout, prepare tobacco leaves planting plan with the peoples government of the relevant provinces, autonomous regions and municipalities directly under the Central Government under the basis of the national plan and the combination of management variety, regional and standardization.

Tobacco companies, their authorized agencies, shall buy tobacco leaves equally as per law. In the regions where the state has released a tobacco leaf purchase plan, tobacco companies or its entrusted units may establish tobacco leaf purchase stations (points) to buy tobacco leaves as needed. Tobacco leaf purchasing stations (points) shall be established with the approval of the tobacco monopoly administrative department of the prefecture-level city. No unit or individual may purchase tobacco leaves without approval.

The license for the transportation of tobacco products is issued and approved by the tobacco monopoly administrative department at or above the provincial level or its authorized agency.The State Council's tobacco monopoly administrative department shall formulate the management measures on tobacco monopoly products that are approved for transport.

Only enterprises approved to obtain a Tobacco Monopoly Production Enterprise License can sell cigarette paper, filter rods, cigarette silk bundles, and machinery exclusively for tobacco products to the tobacco monopoly wholesale enterprise and tobacco product manufacturer.

Tobacco Monopoly Production Enterprise License holders are not allowed to carry the paper, filter rods, cigarette silk bundles, and machinery made by cigarette paper manufacturers, cigarette paper, cigarette filter rod, cigarette silk bundle, and machinery manufacturers.

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