Despite the growing mistrust towards e-cigarettes and the current regulatory atmosphere, RLX’s sales grew 147% to $585 million in 2020, with a small net loss of $20 million, making it China’s largest vaping firm. Subsequently last January, the brand went public with a brand new initial public offering (IPO) on stock markets in the United States.
At the time, Bloomberg News, had reported that RLX Technology intended to sell 116.5 million American depositary shares of their company at $8 to $10 each. This move had elevated Wang into the ranks of the world’s richest.
New regulations in China
Meanwhile, a recent statement by China’s Ministry of Industry and Information Technology (MIIT) announced the addition of a clause to the Detailed Rules for the Implementation of the Tobacco Patent Sales Law of China as Article 65, “.. regulations on e-cigarettes and other new tobacco products shall be implemented with reference to the relevant provisions on cigarettes in the regulations.” The new regulations will affect the production and operation of e-cigarettes, ensure quality and safety standards and set in place advertising guidelines.
Following the announcement, the stock price of RLX Technology Inc., dropped by more than 24% or $14.70 at 9:55 GMT in pre-market trading on the US market. The day after the announcement the brand’s stock price closed at $19.46, with a market value of $30.2 billion. In a period of 55 hours starting on the morning of March 22, shares in company collapsed by 54%, slashing more than $16 billion from the startup’s market cap.
Yet, Wang reassured that she remains unfazed. “That doesn’t bother me,” she said as quoted by Forbes. “Every day I focus on my work, which is problem solving.”
Key factors of the Chinese market
Meanwhile, a recent report by ECigIntelligence, the renowned independent data analysis resource for the tobacco-alternatives industry, looked into the “key aspects and drivers of the current Chinese market.” Amongst these factors, the document listed changes in consumer preferences, the roles of different retail channels and how they are changing, and also pointed out the main players in the industry.
The document also highlighted the fact that China’s market faces specific challenges due to the local tobacco monopoly, which leaves the vaping industry in a vague grey area.
Read Further: Forbes