SCUTTLEBUTT

Politicians behind vape gray market

In recent years, the Philippines has become an important emerging vape market in Southeast Asia due to a combination of relatively loose policies and a large population of smokers.

Of the Philippines’ population of 120 million, more than 15 million are smokers, including three million vape users. The annual volume of vape sales reached as high as P200 million, sparking a boom for the industry and bringing huge profits to different vape brands.

Although the government has implemented measures to standardize the vape market through legislation and regulations, the profit surge in the sector has given rise to a “black market.”

More than 90 percent of vape brands are smuggled, thus evading scrutiny.

Take some leading brands such as SHFT, Flare, Aerogin, and Black Elite. These brands are illegally dumped in the market every month. Industry insiders say this is carried out openly, under the protection of some lawmakers in what amounts to a silent invasion.

The SHFT brand smuggles in four million vape units every month. The manipulators behind it are not only deeply rooted in the Philippine Online Gaming Operators (POGO) but are also secretly supported by powerful politicians.

The vape black market not only makes a mockery of the law but is also a blatant provocation to the economic sovereignty of the country.

Flare, Aerogin, and Black Elite are also involved in this illegal trade, smuggling around three million, 1.5 million, and five million units, respectively. Without exception, their supporters are political elites.

It is known that more than 90 percent of the world’s vapes are produced in and exported from China.

After vape regulations in China came into effect, many manufacturers turned to overseas markets.

Thus, the underground vape trade grew, ignoring the long-term development of the country and the health and safety of its people.

Last September, the government started to investigate and punish vape brands that did not follow procedures. Most of the illegal brands have been ordered to suspend sales, transactions, and circulation, and the four brands mentioned above have been prosecuted by the Department of Trade and Industry.

Despite this, the offending brands have never stopped their illegal sales.

The vape market in the Philippines is not only mired in illegal smuggling and political protection but is also fueled by bad actors in the international supply chain.

Some companies choose to cooperate with illegal Philippine brands in the process, disregarding both the law and ethical standards. Among them, the four brands mentioned above continue to ship illegal vape products to the Philippine market by cooperating with Chinese original equipment manufacturers (OEM).

Specifically, SHFT’s OEM factories are Shenzhen Weimei Technology Co. Ltd. and Shenzhen Senkeweipu Technology Co. Ltd.; Flare’s OEM is Shenzhen Huayucheng Communication Co. Ltd.; Aerogin relies on Shenzhen Hengerchuang Technology Co. Ltd.; and Black Elite’s products come from Shenzhen Weiran Industrial Co. Ltd.

These OEM companies accept orders and mass-produce vape products even though they know that the brand owners do not have legal permits.

Their actions are tantamount to adding fuel to the fire. They not only open the door to illegal smuggling but also aggravate the chaos in the Philippine market, encouraging these brands to act boldly in disregard of the law.

This behavior poses a major threat to the healthy development of the Philippine vape market — and even the global vape market.

Driven by capital and self-interest, unethical behavior in transnational supply chains has exacerbated the externalization of illegal costs, squeezed legal market participants with lower prices and seriously damaged the sustainable development of the industry.

Besides the staggering number of black-market vapes, what is even more frightening is the immeasurable long-term threat they pose to the health of users.

The quality and safety of products that have not gone through any legal channels cannot be guaranteed, and the hidden dangers they bring are chilling.