‘Big vape’: How Chinese multinationals and organised crime fuelled a public health crisis

The smell hits you before they open the pallet: mango, grape and “blackberry pomegranate cherry ice” wafts through the air as Australian Border Force officials comb through a sea of boxes.

Inside this secure warehouse near Botany Bay in Sydney, there are 28,000 vapes in a single load – a fraction of the number arriving in containers each week.

More than 20 pallets are filled with vapes and their accessories. Only five are stacked with cigarettes. These brightly coloured, easily disguised, highly addictive and wildly profitable devices have become the second-largest illegal drug market in the country, worth more than $2 billion a year.

In January, when the federal government announced laws banning disposable vapes, Border Force was seizing 280,000 a month. By May that had almost quadrupled to 950,000, taking the total above four million in the year to date.

Australian Border Force officers unpacking a container load consignment of vapes at the Sydney Container Examination Facility. Credit: Steven Siewert

But vapes are continuing to slip through to convenience stores around the country, fuelled by organised crime gangs making a windfall out of prices more than doubling over the past year and an open rebellion by Australian pharmacists against an Albanese government policy that makes them the face of the legal market.

The Sydney Morning Herald, The Age and 60 Minutes can reveal a series of claims including:

• an employee of a company with links to one of the world’s largest vaping giants boasted about claims of paying the Australian government as it prepared to change laws to sell through pharmacies;
• the Department of Health created an unprecedented “notified list” to rush vapes off the streets and into chemists, which allows big tobacco companies to self-declare that their products are safe;
• and pharmacists are refusing to stock vapes over fears they could be targeted by organised crime.

The government’s vaping reforms are now in jeopardy as it attempts to create a legal market for devices that help people to stop smoking, while cracking down on the illicit trade hooking a new generation on nicotine.

Federal Health Minister Mark Butler said vaping was “the most significant public health menace” facing young Australians.

“Frankly, it got under our guard,” he said. “I hear constantly, particularly from parents in school communities, how angry they are that this has become so rife in schools.”

Decades of public health advances are at risk. For the first time since the 1990s, when Australia began a world-leading crackdown on tobacco, total nicotine consumption grew last year among Australians aged 15-24.

“I’m enormously worried,” said Butler. “All of that progress is threatened by the nicotine addiction that we’re seeing increasingly among young Australians.”

In schools, principals are rostering teachers to monitor toilets at recess and lunch to stop children vaping; teenage vape dealers have become schoolyard fixtures; and students are struggling to get through three-hour exams without nicotine withdrawal.

“What we are seeing in Australia is a really escalating public health crisis,” said Quit director Rachael Andersen, who leads an organisation that has spent decades campaigning against big tobacco.

“Over the last four years, the rates of vaping in Australia have tripled and, really alarmingly, the rates are escalating at a rapid pace among our young.”

The Department of Health’s chief medical officer, Tony Lawler, said the government was monitoring reports from doctors of thermal and chemical damage to the lungs, heart and kidneys, and reports from dentists around significant oral injuries including to the tongue and gums, as well as the growing mental health impacts of nicotine addiction.

Nicotine, heavy metals, arsenic, tin, mercury, and a chemical compound known as diacetyl make up most of the elements in vapes available nationally.

But the health message is struggling to gain traction. Vaping has become normalised in places where smoking has been banned for decades.

“When I found someone vaping in a hospital ward … that was probably the time when I realised not just the health impact, but the social impact that vapes were having on our community,” Lawler said.

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Former vaper Lily Ford.Credit: Simon Schluter

Lily Ford’s vaping journey began when she was 15. By the time she was 20, she was coughing up banana vape liquid and blood.

“I think when you’re younger, it’s the novelty, right? You’re associating the vaping with this idea of being cool,” she said. “It planted a seed in my mind as to what socialising looked like.”

Misinformation proliferated throughout the classroom: “Vaping helped you concentrate, vaping relaxed the muscles in your throat to improve your singing, vaping’s OK because it’s so much better than smoking.”

But Ford’s social vaping spiralled into a full-blown addiction during her final year of school.

“I’d feel anxious, I would reach for the vape, I’d smoke the vape, put the vape down, feel relaxed for almost 10, 15 seconds, straight back to feeling anxious again, picking up the vape, smoking it. It was just a repetitive cycle that I was trapped in for a really long time,” she said. “I was going through quite a tough time. And for me, during that time, vaping was this thing that I could hold on to in the dark and feel like I was secure.”

Today, a third of Australian teenagers have vaped, according to the most recent Australian Secondary Students’ Alcohol and Drug Survey, with many citing social pressure and marketing as key reasons they started vaping.

Health Minister Mark Butler at Parliament House in Canberra.Credit: Alex Ellinghausen

The explosion in vape use prompted Butler to introduce laws this year that banned all disposable vapes and restricted all sales to pharmacies, while limiting flavours to mint, menthol and tobacco, and nicotine concentration of 20 mg/mL or less without a prescription.

“Until we really took hold of this issue last year … the laws had enormous loopholes in them,” Butler says. “You could drive a truck through them.”

But even under the new laws, multinational companies, including those on the Therapeutic Goods Administration’s “notified list”, are continuing to flout Australian laws by advertising banned products for sale in Australia, while vapes are widely available at convenience stores.

iGet, the most popular Chinese brand owned by Shenzhen Hanqingda Technology Co, a company that puts its staff through military drills to teach them to “never give up”, is continuing to market directly to Australians to bulk buy from its range of 30 different flavours in a dozen different vapes, from the “legend” to “the Goat”.

Others, including Alibarbar, are now also entering the market, as the costs of production decrease and factories proliferate throughout China.

Chinese Premier Li Qiang, left, and Australia’s Prime Minister Anthony Albanese. Credit: AP

Chinese vapes have become so dominant in the Australian market that Prime Minister Anthony Albanese raised vaping exports with Chinese Premier Li Qiang when they met in June.

Australian Border Force officials are now liaising with their Chinese counterparts to stem the flow.

Competitors are also emerging, particularly in the Middle East and South-East Asia.

The sharp rise in the cost of vapes (from $25 to $55), fuelled partly by their prohibition, has meant organised crime is taking an interest in the market to complement its profits from illicit tobacco – driving turf wars between tobacconists, convenience stores and vape shops from Ettalong in NSW to Mickleham in Victoria.

“Organised crime recognised that they could make money out of this and channel that money into other criminal activities, drug trafficking, sex trafficking, and all of the other things that organised criminals do,” said Butler.

Australian Border Force assistant commissioner Tony Smith said organised crime groups importing illicit tobacco were increasingly shifting resources into vaping.

“It’s incredibly serious,” he said. “The key thing to note is that where there is a profit to be made, that is where we start to see serious organised crime creep in.”

The government has appointed a dedicated Illicit Tobacco and E-cigarette Commissioner, Erin Dale, to co-ordinate the response across state and federal agencies.

“We want to make sure that organised crime is not creating the next generation of nicotine addicts,” she said.

The Alibarbar factory in Shenzhen. 

Between March 2023 and July this year, there were 71 arson attacks on tobacco premises and other business premises linked to the illicit tobacco and vape market in Victoria alone.

Victoria Police assistant commissioner Martin O’Brien told a Victorian parliamentary inquiry in July that Middle Eastern organised crime entities, outlaw motorcycle gangs and networked youth offenders have all been linked to the attacks.

“Police intelligence suggests that organised crime entities are committing extortion, arson and firearm-related offending as a means to threaten, intimidate, control or eliminate competition in this industry,” he said.

The attacks have also spooked pharmacists, now charged with selling a product very few want to distribute.

The national councillor of the Pharmacy Guild of Australia, Anthony Tassone, said the infiltration of organised crime into the market “led to the decision by many pharmacies to not stock these items”.

Tassone and members of the Pharmacy Guild, which make up 70 per cent of pharmacists, are in open rebellion against the government legislation, putting up 2000 posters across their stores to notify customers they will not stock the products.

“We just felt shocked by these reforms,” said Tassone. “It’s been policy on the run.”

Tassone said vapes had sidestepped the normal process for pharmacy approval by being put on a “notified list” – a term he never heard of until the government rushed through changes to get the legislation passed.

The government watered down its prescription-only model in a deal with the Greens, who wanted easier access to vapes to help Australians give up smoking.

“It’s unprecedented. In all my career, of over 20 years being a pharmacist, I can’t recall another occasion where we had a separate notified list. Something was either approved or not approved,” he said.

To get on the notified list to be supplied in pharmacies without a prescription, all companies have to do is self-declare that their product is safe. The list includes products from big tobacco.

Anthony Tassone, Victorian branch president, Pharmacy Guild of Australia.Credit: Simon Schluter

“One of the manufacturers of these vaping products that are on the notified list is Philip Morris. As some pharmacists have said to me, ‘I’m a health professional, not a tobacconist. I promote healthcare, not big tobacco products’.”

Already, two state governments – Tasmania and Western Australia – have baulked at the list, refusing to allow vapes to be supplied without a prescription.

A Department of Health spokesperson said the TGA was conducting ongoing surveillance of vapes on the notified list to ensure they were compliant with standards. ​

“This includes laboratory testing and monitoring adverse event reports,” the spokesperson said.

Credit: The Age

Other companies on the government’s notified list include Chinese giant RELX. RELX also owns the WAKA brand of disposable flavoured vapes which have been sold illegally in convenience stores and are popular among teenagers.

The company’s Chinese headquarters is run by billionaire former Uber executive Kate Wang. Former Unilever and Didi employee Du Bing oversees its international operations.

RELX has 18 products on the notified list that can now be sold in Australian pharmacies.

Late last year, employees at one of its related entities, Hellow SG, were caught boasting about claims of making government payments in Asia and Australia. The recording was first obtained in Singapore by The Straits Times, but the newspaper did not reveal the company behind the comments.

“In difficult markets or markets with heavy, strict regulations, all you have to do to circumvent them is to go into grey channels,” the employee said. “We don’t do that visibly in Australia and New Zealand. But government payments are not a problem for us because these are extremely … subtle. It’s just like how big tobacco does it. They go through multiple shell companies and associations and consultants and agencies and whatnot.”

This masthead can now reveal Singaporean registration documents show the business at the address in Singapore is registered under Hellow SG. That company is wholly owned by Hellow HK Limited. Hong Kong financial documents show RELX executive Du Bing is the sole director of Hellow HK Limited. Cheerain Inc, a company based in the Cayman Islands, is the only other shareholder.

Singapore’s Health Sciences Authority confirmed it was investigating the company.

RELX was contacted for comment. There is no suggestion of wrongdoing by Wang or Du.

Butler said he had no knowledge of what the payments could refer to but said there was no place for big tobacco or big vape in Australian politics.

“I can’t imagine what payment they would be talking about,” he said. “I’ve never met with them. I only wrote to all of the members of parliament and all of the senators in the lead-up to this legislation to remind them as public officials they’re not supposed to be meeting with big tobacco either.”

Until June, when the government’s prescription model was briefly in operation, one of RELX’s distributors was also offering prescriptions to vape users 24 hours after filling out an online Google Form, without a phone consultation with a doctor, skirting government regulations.

Since then, despite joining the regulated market through a legal distributor, other Australian distributors have been advertising the company’s illegal disposable flavoured pods for sale online to Australian customers.

Butler said he was concerned by RELX continuing to sell illegal products to some distributors and would ask the department to investigate. He defended the laws and the concessions the government made.

“We had to get the laws through the Senate and the argument was made that we needed to balance, first of all, the objective of continuing to provide access to this where there is a genuine therapeutic need, but also clamping down on the main mischief here,” he said.

Despite record levels of seizures at the border and penalties of up to $2 million for shops selling vapes, the illicit trade shows few signs of slowing down.

Vapes were on sale at 10 convenience stores within three kilometres of each other in inner Sydney last month.

“I think the government has tried, yet I’m still seeing people vape and buy vapes,” said Lily Ford.

Ford is one of a handful of former vape users willing to speak publicly against the industry. The 22-year-old has been targeted online by vapers who accused her of attacking a product that helped them stop smoking cigarettes.

“I think there are kids that are picking up the vape because their peers are doing it and they just want to fit in,” she said. “I understand that, I sympathise with it, I’ve seen it and I’ve experienced it.”

Butler said enforcing the new laws would be challenging. While more than 30 countries have attempted to ban vapes with little success, Australia is the only country in the world to have implemented a non-prescription, pharmacy-based vaping supply model.

“I think there is a window still to stamp out recreational vaping, but I don’t pretend it’s not going to be tough,” he said.

On Wednesday, Butler announced that a nationwide vaping intervention program in Australian schools would start next year.

“Now, some people said, ‘it’s all too hard, and we should just give up and raise the white flag and accept this as part of Australian life’,” he said. “But I just didn’t want to do that.”

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