The local vape industry had also recently taken another hit when China announced it was planning to set in place some vape restrictions. However, the Hong Kong-listed Huabao International has now experienced a further drop in shares when it was announced that its chair and CEO Chu Lam Yiu, is being investigated by Chinese authorities for “suspected disciplinary violations.”
This led to fall in shares of 65% last month. “Up to the date of this announcement, the company has not been provided with any details of the nature of the suspected violations of Ms. Chu that is currently being investigated,” the company said in a filing to the Hong Kong Stock Exchange. “The business operation of the Group remains normal.” The company noted that the probe is being conducted by the Leiyang City Supervisory Committee, a government body based in Hunan province, southern China.
Chu 52, owns approximately 70% of Huabao International’s shares, and is often referred to as “China’s vaping queen” for overseeing Huabao International’s entry into the e-cigarette market. Last month her net worth estimated by Forbes at $2.6 billion, while in the most recent rankings of China’s richest, published in November, Forbes estimated Chu’s net worth at $5.8 billion.
New vape draft regulations
Meanwhile, the State Tobacco Monopoly Administration’s recently released draft rules will amend the country’s tobacco monopoly, extending it to e-cigarettes. As per the draft, local businesses must register with the tobacco authority. Moreover, local manufacturers must obtain an additional licence to prove they are in possession of sufficient funds for production, and for a facility and equipment that meet the set standards.
The tobacco authority added that it will establish a “unified national electronic cigarette transaction management platform” that all licensed e-cigarette wholesalers and retailers must sell products through,” while tax collection and payment of e-cigarettes, “shall be implemented in accordance with national taxation laws and regulations.”
This means that vaping products and their manufacturers will be regulated strictly by the Chinese government in the same way as cigarettes, and if done right highlighted Filter, this could mean that “China is about to revolutionize global tobacco harm reduction.”
However, the local vape industry is not that optimistic. John Dunne, Director general of the UK Vaping Industry Association (UKVIA) believes the industry will be affected negatively. “I think in its current form the legislation will have a massive influence on the industry both domestically and internationally, but not all in a good way.”
Read Further: Forbes