New Tobacco Product Policy: Tobacco Administration Emphasizes Deeper Innovation Reform
On July 17, the State Tobacco Monopoly Administration published the Notice on Issuing the Key Tasks for Comprehensively Deepening Reform in 2018 on the China Tobacco website. The document noted that innovation reform in new tobacco products should continu
On July 17, the National Tobacco Monopoly Administration publicly released the "Notice on the Key Points of Comprehensive Deepening Reform Work in 2018" (Guo Yan Fa [2018] No. 104) on the China Tobacco website. The key points indicate that the innovation reform of new tobacco products should continue to deepen, and mention the establishment of an incentive and restraint mechanism for professionals in the field of new tobacco products.
The three directions for deepening the innovation reform of new tobacco products are:
1. Promote the research of policies and regulations for the supervision of new tobacco products. Strengthen the research on classification management measures for new tobacco products from the perspective of policies and regulations. For new tobacco products that fall under the monopoly supervision category, further research and formulation of relevant policies and regulations regarding market supervision, identification and inspection, and case transfer should be conducted; actively promote the inclusion of e-cigarettes and other new tobacco products into supervision, further strengthen market analysis and regulatory model research for e-cigarettes, and coordinate with legislative departments to formulate effective regulatory policies and feasible measures.
2. Promote the innovative development of the entire industry chain of new tobacco products. Accelerate the research and innovation of technology, products, and equipment for new tobacco products, ensure the standardization of integrated products, and promote the standardization, industrialization, and branding of new tobacco products. Strengthen the research and layout of standards for new tobacco products. Deepen the construction of the innovation system for new tobacco products in the industry, accelerate the development of the Shanghai New Tobacco Products Research Institute, Equipment Engineering Center, Shenzhen Research and Innovation Platform, and corporate new tobacco products research institutes, and strengthen high-end cooperation with top international institutions in electronics, materials, machinery, and law.
3. Promote the international expansion of new tobacco products. Explore international market channels for the launch of new tobacco products, promote trial sales in international markets, and conduct research on supporting policies.
4. Promote the incentive and restraint mechanism for professionals in new tobacco products, fully leveraging the leading role of core talents.
The reform of the incentive and restraint mechanism involves promoting reforms in the cadre personnel system, standardizing the evaluation system and salary management, and strengthening the management of total wages. Among them, in promoting the reform of the cadre personnel system, it is mentioned that an incentive and restraint mechanism for professionals in forward-looking, strategic, and specialized fields such as new tobacco products and tobacco biotechnology should be established and improved, fully leveraging the leading role of core talents.
We believe that the deepening of innovation reform for new tobacco products may start from three aspects: regulatory policies, industry chain, and international product expansion. We find that the deepening of regulation is still in the standardization of classification and the refinement of procedures, and the advancement of technology also shows that it is based on internal research with external cooperation, reflecting that our regulatory authorities are accelerating their understanding of new tobacco and are actively improving in related technical fields. At the same time, with the expansion of strategic layout and increased talent incentives in related fields, it also confirms that the new tobacco field is in a rapid development stage that urgently needs high-quality talents to lead.
Investment suggestion: Pay attention to relevant targets in the new tobacco industry chain: Yingqu Technology (secondary supplier of IQOS precision parts), Jinjia Co., Ltd. (layout of new tobacco business), Jiyou Co., Ltd. (layout of new tobacco research and industrialization), Shunhao Co., Ltd. (leading layout of e-cigarette business), Huabao International (H-shares, layout of e-cigarette business), and Maikeweier (New Third Board, leading domestic e-cigarette equipment processing manufacturer).
Risk warning: Risks related to new tobacco policies; risks of mergers and acquisitions; sales below expectations.
The three directions for deepening the innovation reform of new tobacco products are:
1. Promote the research of policies and regulations for the supervision of new tobacco products. Strengthen the research on classification management measures for new tobacco products from the perspective of policies and regulations. For new tobacco products that fall under the monopoly supervision category, further research and formulation of relevant policies and regulations regarding market supervision, identification and inspection, and case transfer should be conducted; actively promote the inclusion of e-cigarettes and other new tobacco products into supervision, further strengthen market analysis and regulatory model research for e-cigarettes, and coordinate with legislative departments to formulate effective regulatory policies and feasible measures.
2. Promote the innovative development of the entire industry chain of new tobacco products. Accelerate the research and innovation of technology, products, and equipment for new tobacco products, ensure the standardization of integrated products, and promote the standardization, industrialization, and branding of new tobacco products. Strengthen the research and layout of standards for new tobacco products. Deepen the construction of the innovation system for new tobacco products in the industry, accelerate the development of the Shanghai New Tobacco Products Research Institute, Equipment Engineering Center, Shenzhen Research and Innovation Platform, and corporate new tobacco products research institutes, and strengthen high-end cooperation with top international institutions in electronics, materials, machinery, and law.3. Promote the international expansion of new tobacco products. Explore international market channels for the launch of new tobacco products, promote trial sales in international markets, and conduct research on supporting policies.
4. Promote the incentive and restraint mechanism for professionals in new tobacco products, fully leveraging the leading role of core talents.
The reform of the incentive and restraint mechanism involves promoting reforms in the cadre personnel system, standardizing the evaluation system and salary management, and strengthening the management of total wages. Among them, in promoting the reform of the cadre personnel system, it is mentioned that an incentive and restraint mechanism for professionals in forward-looking, strategic, and specialized fields such as new tobacco products and tobacco biotechnology should be established and improved, fully leveraging the leading role of core talents.
We believe that the deepening of innovation reform for new tobacco products may start from three aspects: regulatory policies, industry chain, and international product expansion. We find that the deepening of regulation is still in the standardization of classification and the refinement of procedures, and the advancement of technology also shows that it is based on internal research with external cooperation, reflecting that our regulatory authorities are accelerating their understanding of new tobacco and are actively improving in related technical fields. At the same time, with the expansion of strategic layout and increased talent incentives in related fields, it also confirms that the new tobacco field is in a rapid development stage that urgently needs high-quality talents to lead.
Investment suggestion: Pay attention to relevant targets in the new tobacco industry chain: Yingqu Technology (secondary supplier of IQOS precision parts), Jinjia Co., Ltd. (layout of new tobacco business), Jiyou Co., Ltd. (layout of new tobacco research and industrialization), Shunhao Co., Ltd. (leading layout of e-cigarette business), Huabao International (H-shares, layout of e-cigarette business), and Maikeweier (New Third Board, leading domestic e-cigarette equipment processing manufacturer).
Risk warning: Risks related to new tobacco policies; risks of mergers and acquisitions; sales below expectations.
