China’s Vape Industry Takes a Hit Due to Imminent E-Cig Laws

Shares of e-cigarette companies in China dropped substantially, following the release of an official statement announcing tougher e-cigarette regulations.

Diane Caruana

April 2, 2021

A statement by the Ministry of Industry and Information Technology (MIIT) announced the addition of a clause to the Detailed Rules for the Implementation of the Tobacco Patent Sales Law of China as Article 65, “.. regulations on e-cigarettes and other new tobacco products shall be implemented with reference to the relevant provisions on cigarettes in the regulations.” The new regulations will affect the production and operation of e-cigarettes, ensure quality and safety standards and set in place advertising guidelines.

The law amendments will be updated to suit new situations that have emerged in the supervision of new tobacco products such as e-cigarettes.

Following the announcement, the stock price of RLX Technology Inc., one of the biggest manufacturers, distributers and sellers of vaping products in China, dropped by more than 24% or $14.70 at 9:55 GMT in pre-market trading on the US market. Its stock price closed at $19.46 on Friday, with a market value of $30.2 billion.

Together with the State Tobacco Monopoly Administration, the MIIT said that current rules will be updated to suit new situations that have emerged in the supervision of new tobacco products such as e-cigarettes.

“The revision will clarify the legal basis for the supervision and administration of e-cigarettes and other new types of tobacco products. It will be coordinated with the Law of the People’s Republic of China on the Protection of Minors and other laws and regulations.”

The key divers of the Chinese market

Meanwhile, a recent report by ECigIntelligence, the renowned independent data analysis resource for the tobacco-alternatives industry, looked into the “key aspects and drivers of the current Chinese market.” Amongst these factors, the document listed changes in consumer preferences, the roles of different retail channels and how they are changing, and also pointed out the main players in the industry.

The document also highlighted the fact that China’s market faces specific challenges due to the local tobacco monopoly, which leaves the vaping industry in a vague grey area.

Read Further: Global Times