According To The Previous Regulations, The Administrative Measures For Electronic Cigarettes (hereinafter Referred To As The Administrative Measures) Was Officially Implemented On May 1. The Administrative Measures Stipulates That It Is Prohibited To Sell Flavored E-cigarettes Other Than Tobacco Flavor And E-cigarettes That Can Add Atomization By Themselves. However, On April 8, The State Administration Of Market Supervision And Administration (State Standardization Administration Committee) Approved The National Standard Of Electronic Cigarette, Stipulated That It Would Be Implemented From October 1, 2022, And Defined The Five-month Transition Period For Implementation.
Insiders Told Shell Finance That Upstream Brands And Manufacturers Have Stopped Producing Fruit Flavored E-cigarettes In Accordance With The Regulations. However, According To The News, The Channel Of Terminal Stores Can Continue To Clear The Inventory Of Fruit Flavored E-cigarettes Before September 30.
The Regulatory Regulations On E-cigarettes Are Becoming More And More Detailed. On April 25, The State Tobacco Monopoly Administration Announced Several Policies And Measures On Promoting The Legalization And Standardization Of E-cigarette Industry (Trial). On April 26, The State Tobacco Monopoly Administration Issued The Detailed Rules For The Pre Examination Of The Initial Public Offering And Listing Of E-cigarette Related Enterprises At Home And Abroad.
Insiders Said That The Pre Review On Listing Is Not Specifically For E-cigarette Related Enterprises, And Many Industries Have Such Management Norms. Under A Series Of Regulatory Rules, The Overall Market Will Be More Orderly. At The Same Time, The Market Pattern Of E-cigarettes May Be Re Divided.
On May 1, Shops Sold E-cigarettes. Photographed By Sun Wenxuan, Shell Finance Reporter Of Beijing News
During The Transition Period, The Stores Can Continue To Clear The Fruit Flavor Inventory
The Staff Of Several E-cigarette Brand Stores Told Shell Finance Reporters That At Present, The Fruit Flavored E-cigarettes In The Store Can Still Be Sold, And Most Of Them Have Complete Flavors And Can Be Sold Until September 30 This Year. "The State Will Give The Transition Period To September 30 And Let All Manufacturers Sell Their Inventory." The Reporter Of Shell Finance And Economics Learned That At Present, The Prices Of Cigarette Bombs And Cigarette Rods Of Major Brands Of Fruit Flavored E-cigarettes Remain Stable.
On April 8, The State Administration Of Market Supervision (State Standardization Administration Committee) Approved The National Standard Of Electronic Cigarette, Which Will Be Implemented From October 1, 2022, And The Transition Period Will Be Determined To End On September 30, 2022.
"Considering That After The Release Of The National Standard Of E-cigarette, E-cigarette Manufacturers Need To Carry Out Compliance Design Of Products According To The Standard Requirements, Complete Product Transformation, And Apply To Relevant Departments For Product Testing And Technical Review, Which Will Take A Certain Time, A Five-month Implementation Transition Period Has Been Set."
"In Fact, Our Upstream Brands And OEM Manufacturers Should Follow The Management Measures And No Longer Produce Fruit Flavor, Including Smoking Utensils. They Should Also Follow The Relevant Provisions Of Children's Locks, But The Terminal Stores Can Also Sell The Current Inventory Until September 30." Zhao Yangbo, Co-founder Of Electronic Cigarette Brand RXR Shiwu, Told Shell Finance Reporters.
Zhang Yi, CEO And Chief Analyst Of AI Media Consulting, Explained That The "management Measures" Are More Norms And Guidance At The Level Of Market Supervision, Focusing On Some Layout And Requirements In Terms Of Channels, Qualifications And Store Management. The National Standard Of E-cigarette To Be Implemented On October 1 Is Mainly To Standardize E-cigarette Products.
"Can You Still Buy Fruit Taste Unhappy?" A Number Of E-cigarette Store Staff Suggested That The Reporter Should Try To Take Advantage Of This Buffer Period To Store Some Goods, "you Can't Sell Them After September 30. Now It's Time To Clear The Inventory, The Factory Has Arranged To Stop Production, And There Will Be No Fruit Taste After They Are Sold Out." Previously, Before This Transition Period Was Clear, Many E-cigarette Lovers Started The Stock Up Mode One After Another Because They Were Worried That They Could No Longer Buy Fruit Flavored E-cigarettes After May 1. Some Even Bought Hundreds Of Boxes Of Fruit Flavored E-cigarette Cartridges. Some Brand Stores Were Out Of Stock And Once Opened The Price Increase Mode. At This Stage, Due To The Clarity Of The Transition Period, The Voice Of Hoarding And Price Rise Is Not As Enthusiastic As Before.
Both The Administrative Measures And The National Standards For E-cigarettes Prohibit The Sale Of Flavored E-cigarettes Other Than Tobacco Flavor And E-cigarettes That Can Add Atomization By Themselves. This Means That In The Future, There Can Only Be Electronic Cigarettes With Tobacco Flavor On The Market. However, The Staff Of Several E-cigarette Brand Stores Told Shell Financial Reporters That The New Tobacco Flavored E-cigarette Products Have Not Come Out Yet. "Our Company Officially Developed The Tobacco Flavor After Receiving The Policy Notice. It's Not That Fast." A Staff Member Of Yooz Electronic Cigarette Store Said, "we Also Expect The New Taste To Come Down Quickly. Many Customers Are Also Watching That. We Don't Know Whether The Tobacco Taste Is Good Or Not."
Previously, Some E-cigarette Practitioners Told Shell Financial Reporters, "now The Proportion Of Non Tobacco Flavor Cigarette Bombs In Products Is Relatively Large, Which Needs To Be Adjusted In The Future. At The Same Time, The User's Response To Taste Adjustment Is Unknown." For Non Tobacco E-cigarettes Such As Fruit Flavor, It Is Becoming Their Daily Duty To Stop Production, Clear Inventory, Adjust Stores And Reconstruct Products.
Inevitable Pains Caused By Industry Compliance
On April 25, The State Tobacco Monopoly Administration Announced Several Policies And Measures On Promoting The Legalization And Standardization Of E-cigarette Industry (Trial) (hereinafter Referred To As Several Policies And Measures (Trial)).
"E-cigarette Is A New Type Of Tobacco Product. After More Than Ten Years Of Rapid Development, China Has Become An Important Production And Manufacturing Base In The Global E-cigarette Industry Chain. Due To The Regulatory Gap, In Recent Years, The E-cigarette Industry Has Developed Blindly, There Is No Standard To Follow In E-cigarette Production, There Is No Quality Guarantee For E-cigarette Products, And The E-cigarette Market Is In Disorderly Competition, Which Poses A Huge Risk To The Interests Of Consumers, The Physical And Mental Health Of Minors And The Safety And Stability Of The Industry Chain." When Interpreting This Policy, The State Tobacco Monopoly Administration Said That The "several Policies And Measures (for Trial Implementation)" Focused On Standardizing The Order Of The E-cigarette Industry, Protecting People's Health And Safety And Strengthening Tobacco Control, Focusing On Solving The Problems Of Disorderly Industrial Development, Uneven Product Quality And Disorderly Competition In The Market.
Article 3 In The Financial And Economic Policy, The Reporter Mentioned That We Should Strictly Control The Industrial Scale And Prevent Overcapacity. Guided By Optimizing Resource Allocation And Meeting Market Demand, Keep The Industrial Concentration At A Reasonable Level, And Guide Enterprises That Do Not Adapt To Market Competition To Exit In An Orderly Manner.
"Previously, Many Small And Medium-sized Enterprises In Shenzhen Produced Non-conforming Products, And The Third Measure Will Gradually Eliminate Them. On The One Hand, They Do Not Meet The Requirements, On The Other Hand, Their Production Also Needs A License, And It May Be Difficult To Obtain This Approval." Zhao Yangbo Said That Under The Influence Of This Regulation, E-cigarette Brands And Upstream Production Enterprises Will Focus On The Head, And The Product Quality Will Be More Guaranteed. At The Same Time, Some Products Will Be Added In The Medium And Short Term, And The Product Price Will Rise To A Certain Extent. For The Industry, The Overall Market Will Be More Orderly, But Because The Competition Tends To The Head, The Market Pattern May Be Re Divided, "and The Homogenization Of Products May Be Relatively More Serious."
Ding Daoshi, An Internet Analyst, Said That For Leading Enterprises, This Provision Actually Has More Advantages Than Disadvantages, Because After A Series Of Thresholds, Some Small And Medium-sized Enterprises May Be "swept Away"( ?site_id=242986&euid=&t=https%3A%2F%2Flist.jd.com%2Flist.html%3Fcat%3D737%2C738%2C12394 ) Out, And For Large Enterprises, Their Market Share Should Be Further Expanded.
Article 19 Of Several Policies And Measures (for Trial Implementation) Stipulates That A Pre Examination System Shall Be Established For The Initial Public Offering And Listing Applications Of E-cigarette Enterprises At Home And Abroad. The Competent Department Of Tobacco Monopoly Administration Under The State Council Shall Perform The Duty Of Pre Examination, And The Electronic Cigarette Enterprises To Be Listed Can Perform The Follow-up Listing Procedures Only After Being Examined And Approved. On April 26, The State Tobacco Monopoly Administration Issued The Detailed Rules For The Pre Examination Of The Initial Public Offering And Listing Of E-cigarette Related Enterprises At Home And Abroad.
The Detailed Rules Mentioned That The E-cigarette Related Enterprises That Intend To Make Initial Public Offering And Listing At Home And Abroad Should Submit The Pre Examination Application Documents And Relevant Materials To The Tobacco Monopoly Administration Department Under The State Council, And The Follow-up Issuance And Listing Procedures Can Be Implemented Only After They Are Examined And Approved By The Tobacco Monopoly Administration Department Under The State Council. The Pre Examination Of The IPO And Listing Application Of E-cigarette Related Enterprises Does Not Indicate That They Make A Substantive Judgment Or Guarantee On The Investment Value Or Investor Income Of The Securities.
The Reporter Of Shell Finance And Economics Noted That There Are More Than 20 Items In The Pre Review Material List, Including Business License, Enterprise Ownership Structure And Other Basic Information Of The Enterprise, License Of Tobacco Monopoly Production Enterprise, Identity Information Of Enterprise Directors, Supervisors And Senior Managers, Self Inspection Report On The Strict Implementation Of The Management Measures, Report On The Implementation Of Mandatory National Standards And Relevant Normative Documents, Raw Material Procurement Related To Export In The Last 36 Months Product Production And Overseas Sales Order Data, Etc.
"This Increases The Financing Difficulty And Cost Of The Brand, But It Will Also Make The Industry More Compliant. The Development Will Be Restrained In The Short Term, But This Is Also An Inevitable Pain Brought By Compliance." Zhao Yangbo Said.
Zhang Yi Said That The Tobacco Industry Is Indeed A Sensitive And Special Industry, But In Addition To Tobacco, Many Other Industries Will Conduct Pre-approval Before IPO, And Comply With The Management Norms In Most Special Fields. "For Enterprises In This Industry, The First Thing Is To Have Sufficient Legal And Policy Expectations And Psychological Preparation. The Pre Review Of Enterprises To Be Listed Mainly Involves All Aspects Of Legal Compliance. In Case A Large Number Of Enterprises Suddenly Apply For Listing, This Pre Review Will Have A Certain Regulatory Effect."
The Wholesale Circulation Of E-cigarettes May Change A Lot In The Future
The Unified E-cigarette Management And Trading Platform Has Also Been Emphasized Again By Several Policies And Measures (Trial). Article 21 Refers To The Construction Of A National Unified E-cigarette Trading Management Platform And The Formulation Of Open And Transparent E-cigarette Trading Management Rules And Platform Operation Guidelines. The Main Body Of E-cigarette Market Should Conduct Transactions Through The E-cigarette Transaction Management Platform. Promote The Whole Process Management Of E-cigarette Trading Business Flow, Logistics, Capital Flow And Information Flow, And Take The Transaction Data As An Important Basis For Market Standardized Management, State Evaluation And Effective Supervision.
Article 20 Of The Previously Promulgated Administrative Measures Stipulates That The Department Of Tobacco Monopoly Administration Under The State Council Shall Establish A National Unified E-cigarette Trading Management Platform. E-cigarette Product Manufacturing Enterprises And E-cigarette Brand Holding Enterprises That Have Obtained Tobacco Monopoly Licenses According To Law Shall Sell E-cigarette Products To E-cigarette Wholesale Enterprises Through The E-cigarette Transaction Management Platform. Enterprises Or Individuals That Have Obtained The Tobacco Monopoly And Retail License And Are Qualified To Engage In E-cigarette Retail Business Shall Purchase E-cigarette Products In Local E-cigarette Wholesale Enterprises.
On April 13, Relevant Departments Of The State Administration Of Market Supervision And The State Tobacco Monopoly Administration Revealed That Since June 15, 2022, E-cigarette Related Production Enterprises, Wholesale Enterprises And Retail Market Entities That Have Obtained Tobacco Monopoly Related Licenses Have Gradually Traded On The Platform.
Zhao Yangbo Previously Told Shell Finance Reporters That In The Past, E-cigarette Brands Did Not Have A Particularly Strict Form Of Sales, Some Through Wechat Merchants, Some Through Specialty Stores, And Some Through Investment Exhibitions. "This Regulation Is Equivalent To That The Brand Side Cannot Directly Sell E-cigarettes To Anyone In The Future. It Is Possible That The Future Sales Behavior Will Be Handed Over To The Wholesale Enterprise As The Main Body. Most Dealers In The Market Also Need To Deal With Enterprises With Wholesale Qualification, Rather Than Directly Take Goods From The Brand Side."
In Zhang Yi's View, E-cigarette Sales Will Be Unified Through The Trading Platform Built By The State, And The Three Streams Of Funds, Commodities And Taxes Will Be Unified. The Chaos Of Goods Collusion, Disorderly Prices, Counterfeiting And Shoddy, Tax Evasion And Tax Evasion Will Be Eradicated.
However, Zhao Yangbo Added, "not All Exclusive Stores Can Successfully Obtain E-cigarette Sales Licenses, Which Will Also Lead To The Closure Of A Number Of E-cigarette Stores." The Reporter Of Shell Finance And Economics Noted That Article 9 Of Several Policies And Measures (Trial Implementation) Stipulates That The Tobacco Monopoly Administration Department Of The State Council Shall Guide The Provincial Tobacco Monopoly Administration Departments To Formulate The Layout Plan Of E-cigarette Retail Outlets. Each Provincial Tobacco Monopoly Administrative Department Shall Be Responsible For Formulating And Implementing The Rational Layout Plan Of E-cigarette Retail Outlets Within Its Administrative Region. The Layout Planning Shall Conform To The Local Market Demand And The Aggregation Characteristics Of Consumer Groups.
The Staff Of The Above Yooz E-cigarette Store Told The Shell Finance Reporter That Many Stores Are Now Facing Difficulties In Handling Retail Licenses. As Long As The Certificates Are Handled, They Can Operate Normally. "We Are Also In The Process Of Applying, Which Will Be Carried Out Uniformly By The Company, And Will Be Officially Handled After The May Day Holiday."
Article 20 Of The Administrative Measures Also Stipulates That Enterprises Or Individuals Who Have Obtained Tobacco Monopoly And Retail Licenses And Are Qualified To Engage In E-cigarette Retail Business Shall Not Exclusively Operate E-cigarette Products On The Market.
"In The Future, There Will Be No Exclusive Stores, Only Collection Stores And No Franchises. If Our Family Continues To Open The Business License, There Will Be Several Brands In A Store. It Will Not Be Like This. For Example, There Will Be Yooz Next Door And Yueke Next Door. There Will Be A Distance Limit Between Stores." The Staff Of The Above Yooz E-cigarette Store Told Shell Finance That Yooz Would Cooperate With Yueke, Xuejia, Fulu, Ono And Other E-cigarette Brands To Open Collection Stores. "The Collection Store Must Be Hoarding More Goods And Pressing More Money. If It Makes Money, It Must Make More Money Than The Exclusive Store Because It Has A Wider Customer Base."
Fang Hui, Partner And CMO Of Baide, Previously Said That Non Exclusive Operation Means That Brand Stores Will Become History And Will Be Replaced By Collection Stores. "For A Single Brand, There Will Be More Opportunities To Reach Consumers. However, The Product Competition Of Various Brands Will Be More Direct And Fierce."
Zhao Yangbo Said, "in Fact, More Of The Trading Parties Have Changed. Originally, These Retail Outlets Placed Orders Directly To Brands, But Now They Purchase From Wholesale Enterprises. From This Perspective, The Wholesale Circulation Of E-cigarettes Will Change Greatly In The Future, And The Form Of Retail In The Terminal Is Only One Aspect. We Think That With The Gradual Exploration And Promotion Of Compliance And Market, There May Be Some New Changes In This Aspect."