Securities Times reporter Yu Shengliang
The State Tobacco Monopoly Administration recently issued the “Administrative Measures for Electronic Cigarettes (Draft for Comment)”. Although it is still seeking comments, the structure has been generally determined. The provisions reflect strict control everywhere, and the entire electronic cigarette industry structure has been subverted and reconstructed.
The core spirit of traditional tobacco monopoly practices has been moved into the “Administrative Measures”. Production, wholesale, and retail are all licensed, and no entry is allowed without qualification. The transaction is strictly limited to a newly established channel. Foreign investment and expansion Production, advertising, and import are all controlled, and even the purchase of cigarette labels needs to be specified.
Although some analysts believe that the dust has settled and obtaining legal recognition is good news, it is estimated that most practitioners are worried about how to obtain legal status, how to adapt to the new rules, and worry that the market will shrink and it will be difficult to use their hands and feet.
The components of e-cigarettes, including cigarette sticks and pods, belong to the scope of e-cigarettes. Previously, there was a saying that atomization equipment belongs to electronic products, and the new regulations avoid “fish that slip through the net.” Some market segments are completely gone. For example, what the industry called “Big Smoke”. At the beginning, it was a big smoke world. Consumers could fill the smoke oil by themselves. Some old enthusiasts like this product. Now the mainstream of the market cannot change the smoke bomb. The “small smoke” has only appeared in recent years.
Investors originally thought about nicotine production. The “Administrative Measures” stipulated that artificially synthesized nicotine should not be used to sell e-cigarettes in the Chinese market, and this field was shut down.
For practitioners, there is also a positive side, because the sale of e-cigarettes on the Internet is currently not allowed, and the online market is occupied by some micro-businesses and illegal vendors, which disrupts the distribution of brand channels and affects the brand’s image. Previously, it was the brand owners who cracked down on this kind of behavior. Now that the state is strongly involved, the government can do this.
The downside is also obvious. According to the new channel setting, brand owners and wholesalers must conduct transactions in a unified trading market led by the management department. Local retailers purchase goods from local wholesalers, and other channels are illegal. The original channels of the brand owners are dismantled, and if they cannot establish control advantages in the new channels, the brand value will be compromised.
As an emerging category, e-cigarettes were previously a freely competitive product, and industry winners have a huge lead. Now, under the strong supervision of government departments, e-cigarettes are about to start a new order, competition may not be so fierce, and the way of corporate competition under control has changed, and the industry may form a new pattern. Under the new pattern, because publicity is not allowed just like tobacco, and the importance of channels is prominent, it is still unknown how to gain an advantage in channels and which endowments will play a decisive role.
At present, the tax policy for e-cigarettes is not clear, and it is not known whether e-cigarettes will increase in price due to this, but it is obviously impossible to follow the original tax rate. The development speed of e-cigarettes will slow down, industry profits will also decline, and the appeal of the entire industry to capital will decrease. This is also the reason why many funds have not invested in e-cigarettes before. The huge policy uncertainty casts a shadow on the industry’s prospects.Return to Sohu to see more
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