The market expects that the regulation of the e-cigarette industry will be strengthened in the near future, and now the boots have landed.

On March 11, the State Tobacco Monopoly Administration issued a notice that the measures for the Administration of Electronic cigarettes will come into force on May 1, 2022, clarifying the regulatory rules for new tobacco products such as electronic cigarettes. meanwhile,To openly solicit opinions on the national standard of "e-cigarette" (the second draft for soliciting opinions), the taste is clearly limited to tobacco flavor.

Affected by the news, RLX Technology Inc., a Chinese stock whose Yueke brand is China's number one e-cigarette brand, plunged 36.54 per cent last night. In fact, recently, A shares and Hong Kong stocks in a number of e-cigarette concept stocks fell endlessly. From March 3 to 11, Smoore International Holdings Limited, the world's leading manufacturer of atomization equipment, fell 26.2%, wiping out HK $44.2 billion in market value.

After the above policies were released, the Electronic cigarette Industry Committee of the China Electronic Chamber of Commerce immediately stated that it would firmly support the requirements of the State Tobacco Monopoly Bureau on promoting the legalization and standardization of the governance of the electronic cigarette industry. strictly implement the relevant regulatory policies of the management measures on electronic cigarettes, actively organize, guide, coordinate and provide practical services to the industry, do a good job in policy interpretation, and give full play to the role of the association as a bridge. We will earnestly do a good job in protecting minors, encourage R & D and innovation in enterprises, guide the standardized and orderly development of the domestic market, and actively open up the international market.

In addition to RLX Technology Inc. and Smoore International Holdings Limited, A shares and Hong Kong stocks related e-cigarette concepts include Jinjia shares (domestic cigarette standard leader), Huabao International (tobacco flavor flavor leader), Jiyou shares, Shunhao shares, Dongfeng shares, China Tobacco Hong Kong, China Bolton, Asher (domestic atomization channel leader) and so on.

The IPO of e-cigarette enterprises must be examined and approved by the competent department.

Compared with the draft for soliciting opinions, the formal draft of the measures for the Administration of Electronic cigarettes has changed a lot, with a lot of new contents: for example, the initial public offering and listing of the enterprises specified in the preceding paragraph shall be submitted to the department of tobacco monopoly administration under the State Council for examination and approval. The enterprises specified in the preceding paragraph include e-cigarette production enterprises (including product production, substitute processing, brand holding enterprises, etc., the same below), atomization production enterprises and nicotine production enterprises for electronic cigarettes. Industry insiders believe that this means that it is more difficult for domestic main e-cigarette enterprises to have new listed enterprises.

For example, the new "Tobacco Monopoly Administrative Department under the State Council has issued a plan for the purchase and sale of tobacco monopoly products such as tobacco leaves, re-roasted tobacco leaves, cut tobacco, and so on." Previously, some market participants expected that the e-cigarette industry might adopt the regulatory approach of unified purchase and marketing or quota system. At present, it is seen that it is the first to land in some raw material procurement links.

In addition, on the basis of "enterprises or individuals with tobacco monopoly retail licenses qualified to engage in e-cigarette retail business should purchase e-cigarette products from local e-cigarette wholesale enterprises", add "e-cigarette products that are not exclusive to be sold on the market". Industry insiders said that this is a fatal blow to the current e-cigarette store system. After the "management measures" come into effect, the store will be transformed into a collection store business model for a variety of e-cigarette products.

Other new contents include: it is forbidden to hold exhibitions, forums and expositions that promote e-cigarette products in various forms; the transportation of e-cigarette products, atomization and nicotine for e-cigarettes shall be subject to the supervision of tobacco monopoly administrative departments; commodity inspection of imported e-cigarette products shall be carried out in accordance with the relevant provisions of the State.

It is worth noting that the Administrative measures have added new measures to combat intellectual property violations.

It needs to be emphasized that licensed operation is an important measure to further standardize the development of e-cigarette industry. The Administration measures require that enterprises producing e-cigarettes, atomization and nicotine for e-cigarettes must obtain a license for tobacco monopoly production enterprises and be approved and registered by the market supervision and administration department.

The taste of e-cigarettes will be further restricted

Industry insiders believe that the combination of the above two documentsThe biggest impact on the e-cigarette industry lies in the ban on flavors other than tobacco.It is also the main reason why RLX Technology Inc. 's share price plummeted.

According to the second consultation draft of the national standard of "Electronic cigarette", the atomization design should not induce minors and should not make the characteristic flavor of the product show other flavor except tobacco, and the atomization should contain nicotine. Corresponding to the "management measures", the sale of flavored e-cigarettes other than tobacco flavor and e-cigarettes that can add their own atomization are prohibited.

An investor who has been following the e-cigarette industry for a long time told the China Securities News: "the ban on taste means that the attractiveness of e-cigarettes is greatly reduced." This matter is divided into two aspects: on the one hand, it is not very friendly to the consumers who have replaced cigarettes, on the other hand, it protects the young consumers who were non-smokers before. "

Some analysts believe that, according to the current information, the future domestic sales of e-cigarette products will only have tobacco taste, flavored e-cigarettes will be banned, can only sell tobacco-based mixed flavor. The US FDA retained tobacco and menthol flavors when it banned e-cigarettes two years ago, and other seasoning products were also required to be removed from the shelves. By contrast, the domestic regulation of e-cigarettes may be more stringent than that of the United States.

According to the first draft of the national standard of "Electronic cigarette", 122 substances and their maximum use are specified in the list of substances temporarily permitted to be used by aerosol additives. However, the second draft reduced the number of additives to 101, and all the ingredients on the smoke bomb should be accurately printed on the product.

The contents of the electronic cigarette sets in the two draft for soliciting opinions have not changed much. For example, electronic cigarette sets and cigarette cartridges using electronic cigarette liquid should have a closed structure to prevent artificial filling; electronic cigarette sets and cigarette cartridges using electronic cigarette liquid should have good sealing and should not leak liquid; electronic cigarette sets should have the function of preventing children from starting and preventing accidental start-up, and so on.