The Hong Kong government may be planning to revise some of the laws regarding the re-exportation of various cigarette alternatives like vapes and e-cigarettes before the end of 2022.
The updates to the ban that was placed in April will only prove beneficial for the Hong Kong economy, rather than any vapers within the state hoping to be able to legally purchase vape products again.
The chief purpose for the changes will be to reignite the economy through the value of re-exports, owing to Hong Kong’s status as one of the main re-exportation routes from mainland China.
“Senior officials are mulling over the relaxation of the transshipment ban on re-exporting the alternative smoking products from Hong Kong, given the significant values of the re-export,” a government insider told the South China Morning Post.
Should the ban on re-exportation be eased, it is likely that the government will allow sea-to-air transshipment in Hong Kong. This was not allowed as it was determined that the risk of products slipping back into the Hong Kong market was too great to allow.
This resulted in only air transshipment, and cargo that did not leave a plane or ship, being exempt.
The Importance of Allowing Re-Exportation for Hong Kong and the Global Industry
The main reason for the government officials to allegedly be reconsidering the re-exportation aspect of the cigarette alternative ban is the economic benefits of allowing transshipment to resume as it did before the ban took hold, greatly opening up the possible trade routes.
Before the ban, Hong Kong was one of the main transshipment routes from the city of Shenzhen in the Bao’an District of mainland China. This city alone contributed roughly US$19.23 billion to the global vaping industry, according to the 2021 Electronic Cigarette Industry Blue Book.
To illustrate the country’s prominence as an international supplier even further, this equates to roughly 95% of the global vape industry.
The Hong Kong Association of Freight Forwarding and Logistics went on to state that the ban on re-export cargo directly resulted in losses of over US$16.5 billion
This also resulted in a 10% loss in Hong Kong’s annual export volume through air freight, causing a major loss in government revenue.
According to Financial Secretary Paul Chan Mo-po, the projected budget deficit of Hong Kong is an estimated US$12.7 billion, which is nearly double the forecasted amount. This kind of economic pressure is certainly the driving force behind officials reconsidering the ban.
Preventing Recirculation in Hong Kong
While the potential reversal of some of these policies will likely not benefit vape users in the Chinese autonomous state, there is room for error that can allow for it.
Hong Kong will need to be extremely thorough to prevent these products destined for re-exportation from filtering back into the illicit trade market.
It is likely that the Hong Kong customs officials will be up to the task at hand, though.
“About 2.63 million suspected illicit [heated tobacco products], about 190,000 suspected nicotine-containing electronic cigarettes, and about 5,000 milliliters of suspected nicotine-containing electronic cigarette oil were seized with an estimated market value of about $15 million,” a press release stated after the ban took effect.
While this was done during the initial crackdown on vape products, it is possible that the officials will be thorough enough to prevent a significant market from emerging.
Potential Consequences of Allowing Re-Exportation
Another concern for those against opening up these routes is the potential to undermine the newly implemented laws.
“The government is facing mounting fiscal pressure with poor revenue from stamp duty and land sales,” said Simon Lee Siu-po, an economist, told the South China Morning Post. “It is understandable that it needs to generate some income from various means.”
“But the U-turn might defeat the government’s purpose of safeguarding public health while the public may think the government hasn’t kept its promise on the crackdown on tobacco products,” he continued.
With the Hong Kong government deciding to put in place such a prohibition of cigarette alternatives, there is understandably a huge group of officials advocating against these products.
As with any of these types of groups, a change in regulations like this will likely be met with huge disapproval, despite its promise of economic gain.
The Hong Kong Vape Ban
The Hong Kong government officially banned the sale, manufacture, and importation of any cigarette alternative on April 30, 2022.
This ban was all-encompassing, including vapes, e-cigarettes, e-liquids, and heat-not-burn tobacco products.
The announcement of the ban resulted in a huge number of consumers who use vapes and heat-not-burn products flocking to stock up on their favorite products before the ban was implemented.
The ban was imposed as lawmakers intended to prevent the underage population from having any access to these types of products. This, of course, left even vapers and adults looking to quit smoking through vaping or another cigarette alternative with little to no options.
Any breach of the new laws would be subject to fines of up to HK$50,000 (roughly US$6,370).
While it is still legal to use any vape products or devices obtained before the crackdown, consumers have been left without the ability to restock any products at this point. This causes an even greater potential for products like e-liquids to slip back into a vape black market in Hong Kong.
The Hong Kong government is considering amending the ban on the transshipment of vapes and other cigarette alternatives that was put in place on April 30, 2022. While vapers in the city will not benefit from the change, it has the potential to hugely boost Hong Kong’s economy.
The laws will likely change to allow mainland China to export multi-billion dollars worth of exports to the global vape industry through Hong Kong, without the current limitations like air transshipment or cargo that does not leave the cargo vessel while in Hong Kong.