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December 1, 2021

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E-cigarette under tobacco regulation. What’s next?

The State Council, China’s Cabinet, has officially incorporated e-cigarettes into tobacco industry regulations, which may boost industry development with strict supervision.

The statement, released online on Friday night, didn’t give any further details. But it has clarified electronic cigarettes’ legal position and regulatory direction to standardize the whole industry chain, covering production, distribution and protection for minors, industry officials said at the weekend.

Based on traditional tobacco industry regulations, e-cigarette firms are required to reveal ingredients, warn of smoking risks and pay a high rate of tax. They are not allowed to sell online or open stores near schools, analysts said.

The statement, “necessary and timely,” regulates the electronic cigarette industry, solves problems such as product quality and safety risks and protects consumer interests, said the China’s Electronic Cigarette Industry Committee.

China has a complete e-cigarette industry chain, with about 3 million jobs. In 2021, China’s e-cigarette exports will hit 100 billion yuan (US$15.6 billion), according to the committee.

E-cigarette maker RLX Technology Inc will “strictly obey the rules and make any required changes,” the New York-listed firm said on its official WeChat account.

In March, China’s officials said they would release regulations for e-cigarettes and other new tobacco products. Before that, it was in a regulatory “grey” area.

The market and analysts welcomed the change.

RLX shares closed 1.85 percent higher on Friday, US time, after the statement was revealed.

The statement defines the legal status of e-cigarette production and sales. It may speed up the debut of a detailed e-cigarette national standard to raise the industry entry thresholds, which benefits leading companies with compliance advantages, TF Securities said.

And it may bring more tax income in China, TF Securities said.

It’s a “tailed regulation” for new technologies, industries and business models in China. The growing e-cigarette market will usher in a healthy development under standardized supervision, said Shi Fanke, an analyst of Zheshang Securities.

The standards should clarify facts such as e-cigarette additives, nicotine contents, added temperatures and methods to keep them away from children, analysts said.




 

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