China’s State Council has amended its tobacco monopoly law to include e-cigarettes on November 26, eight months after it released a draft guideline to bring vaping under the legislation supervision, as reported by Reuters on the same day. The law revision clarified the legal status of vaping products for the first time, bringing e-cigarettes into the regulatory system rather than prohibiting it. However, the changes preserved the wording of the draft. This means the e-cigarette producers need to wait for further regulations to decide how their products will be overseen and whether they need licenses from the State Tobacco Monopoly Administration (STMA) like traditional cigarette companies.

STMA takes full control of China’s tobacco industry, while e-cigarettes had previously been in a regulatory grey zone. The country grew the world’s largest e-cigarette market worth RMB8.4bn in 2020, more than eight times the 2015 value. The mainland government declared the sale of e-cigarettes to minors to be illegal in 2018 and forbade online sales the following year. The new amendment could impact about 170,000 enterprises in the fast-growing industry. Market leader RLX Technology [RLX:US], which takes up over 60% of the market share, stated on its official WeChat account that it would comply with the new rules and make any required changes. RLX’s stock closed 1.8% higher on the day the amendment was released, while it had lost about 70% of market value since the announcement of the draft guideline on March 22.

Sources:

https://www.reuters.com/world/china/china-adds-e-cigarettes-tobacco-monopoly-law-2021-11-26/

https://www.caixin.com/2021-11-26/101810899.html

https://www.caixinglobal.com/2021-11-29/china-adds-e-cigarettes-to-tobacco-monopoly-law-101811410.html

https://asia.nikkei.com/Business/Companies/Chinese-vaping-crackdown-threatens-to-snuff-out-industry