Are you ready to seize the overseas market for electronic cigarettes?

Ready for global e-cigarette market expansion?

Recently, the General Administration of Customs issued the “Announcement on Matters Related to the Taxation of Electronic Cigarettes” (No. 102 of 2022), which will impose consumption tax on imported electronic cigarettes from November 1, 2022. This “Announcement” clarifies that electronic cigarettes will be included in the scope of consumption tax collection, and a sub-category of electronic cigarettes will be added under the tobacco tax category. The tax rate for production (import) is 36%, and the tax rate for wholesale is 11%. Taxpayers exporting electronic cigarettes will be subject to the export tax refund (exemption) policy, and electronic cigarettes will be added to the list of imported goods for border trade that are not eligible for tax exemption and will be taxed accordingly.

According to the “2022 Blue Paper on the Export of Electronic Cigarette Industry”, the global electronic cigarette market will exceed US $108 billion in 2022, and the overseas electronic cigarette market is expected to maintain a growth rate of 35% in 2022, with a total scale exceeding US $100 billion. In terms of China’s electronic cigarette exports, it is expected that the total export volume of electronic cigarettes will reach 186.7 billion yuan in 2022, with an expected growth rate of 35%.

The packaging of electronic cigarette products for export should comply with the requirements of the administrative department of tobacco monopoly of the State Council. Electronic cigarette products that are not sold in China and are only used for export shall comply with the legal regulations and standards of the destination country or region. If there are no relevant laws, regulations, and standards in the destination country or region, they should comply with China’s relevant laws, regulations, and standards.

Currently, there are more than 1,500 domestic electronic cigarette manufacturing and brand companies, including more than 1,200 manufacturers, more than 200 electronic cigarette brand companies, and about 120 e-liquid companies. More than 70% of these companies focus on exporting products overseas.

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Initially, electronic cigarettes were designed to meet the demand from overseas markets, where many laws and regulations prohibit smoking in public places. Additionally, people in these countries generally have a higher standard of living with more affluent individuals who have stricter requirements for the quality of life. Therefore, electronic cigarettes were initially designed for export.

When asked which country has the widest distribution of electronic cigarette shops, the first country that comes to people’s minds is undoubtedly the United States! This is because the United States is the world’s largest electronic cigarette market with the most physical stores (prior to the implementation of the FDA’s new electronic cigarette regulations).

Data shows that the fastest-growing electronic cigarette market is in North America, mainly the United States, with an estimated market size of 10.3 billion US dollars in 2021. Canada’s market size is estimated to be 1.4 billion US dollars. Western Europe follows closely behind with a market size of 6.6 billion US dollars, followed by the Asia-Pacific region with 4.4 billion US dollars, and Eastern Europe with 1.6 billion US dollars. The smallest markets are the Middle East and Africa, with a market size of 490 million US dollars, Latin America with 122 million US dollars, and Oceania with 118 million US dollars.

In Europe, France is one of the best-selling EU member state markets for electronic cigarettes, with a market size of 817 million euros. It is followed by the United Kingdom, Germany, Italy, Poland, and Spain. In France, there are 2.8 million electronic cigarette users, with an adult usage rate of 5.4%, which is nearly double the overall adult usage rate (2.9%) in the EU market.

When selling electronic cigarettes in the European and American markets, you can choose to register an overseas entity, such as a US company, Canadian company, or UK company, to conduct sales. This can achieve localized operations and also obtain more traffic from the platform. EasyTax has local operational centers in the United States, Europe, and other areas, which can help you solve the problem of registering overseas companies and financial and tax compliance, and help export companies seize the overseas electronic cigarette market. If you are a seller with a demand for registering an overseas entity, please contact us for more detailed information.

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