China issues draft rules requiring e-cigarette firms obtain licences

SHANGHAI (Reuters) -China’s tobacco regulator issued on Thursday draft rules governing e-cigarettes, moving the product away from a regulatory grey area and under the oversight of the state.

The State Tobacco Monopoly Administration’s draft rules follow China’s cabinet last week amending its tobacco monopoly law to include e-cigarettes.

According to the draft rules, companies selling e-cigarettes in China must meet national standards in order to register with the tobacco authority and do business legally.

Companies engaged in the production of e-cigarettes must also receive a special licence from the tobacco authority, provided they can prove that they have the funds for production and a facility with equipment that meets standards.

The tobacco authority said that it will establish a “unified national electronic cigarette transaction management platform” that all licensed e-cigarette wholesalers and retailers must sell products through.”

Tax collection and payment of e-cigarettes, meanwhile, “shall be implemented in accordance with national taxation laws and regulations,” the regulator wrote.

A bevy of Chinese companies manufacturing and selling nicotine salt-based e-cigarettes for the domestic market emerged in 2018 following the success of similar products overseas.

The largest among them, RELX Technology Inc went public in New York in January.

China’s cigarette industry operates under a state-run monopoly directly controlled by the tobacco regulator, which dictates pricing and distribution for brands and generates tax income for the government.

(Reporting by Josh Horwitz; Editing by Muralikumar Anantharaman & Shri Navaratnam)