(Asian Tech Press)On March 22, the website of China’s Ministry of Industry and Information Technology (MIIT) released an announcement, to require e-cigarettes and other new tobacco products to be governed with reference to the relevant regulations for cigarettes.
China’s tobacco industry operates as a state-owned monopoly, and is an important source of tax revenue for China. In 2020, China’s tobacco industry generates about 9% of the country’s total tax revenue.
The news sets off the market directly. That evening the stock price of RLX Technology Inc then plunged, closing down nearly 48%, reducing the market value to about $15.8 billion. In Hong Kong stocks, electronic fogging equipment foundry Smoore International once fell nearly 40%.
On March 23, affected by the news, the A-share e-cigarette concept stocks opened with the same across-the-board plunge, Eve Energy was once plunged nearly 20%, Aisidi opened directly down, and Yinghe Technology fell 6%.
RLX Technology, China’s first e-cigarette stocks, listed on the New York Stock Exchange on January 22, 2021, with a market value of $ 45.8 billion. Its e-cigarette brand, RELX, has accounted for 70% of sales in Tmall, JD and other Chinese e-commerce channels by 2018.
However, in November 2019, China introduced a policy to ban online sales of e-cigarettes, and RELX then established a large offline sales network. Up to now, there are nearly 23,000 offline brick-and-mortar stores of RELX, spanning 33 provinces, autonomous regions and municipalities directly under the central government in China.
China is to revise the Implementation of the Tobacco Patent Sales Law, which will bring e-cigarettes into the scope of regulation, making them taxable like tobacco, and its sales will perhaps require a license. Similarly, RELX will need to obtain such a license from Chinese governments in the future.
It is foreseeable that China’s upcoming revision of the tobacco law will combat the current good momentum of e-cigarettes, and will undoubtedly be a bludgeon to e-cigarette giants like RELX.
