RELX’s Listing Is Not Only a Win for Chinese Vaping Regulation, but Also a Step Toward Industry Stan

Recently, RELX was listed on the New York Stock Exchange under the stock code RLX. RELX is the largest brand in China. According to a CIC report, as of September 30, 2020, RELX held a 6% market share in the domestic e-cigarette market.

As an industry leader, Juul, the largest in the U.S., has faced difficulties due to insufficient protection for minors, but RELX successfully landed on the New York Stock Exchange, becoming the most valuable e-cigarette brand in the world. This not only reflects the self-discipline and perseverance of the company but also showcases China's wisdom in e-cigarette regulation. Due to appropriate supervision, the Chinese e-cigarette market has not repeated the "chaos" seen in the U.S. According to research from the Chinese Center for Disease Control and Prevention, over 96% of e-cigarette users in China are smokers.

After going public, RELX has become a listed company, destined to become more self-disciplined and standardized. The demonstration effect of leading enterprises will drive positive development across the industry. At the same time, it will bring more advantages to RELX in international market competition, which in turn will enhance China's voice in the global e-cigarette value chain, from technology research and development to manufacturing and beyond, expanding to competing brands and becoming a globally influential "domestic product light."

RELX's successful listing is a victory for effective regulation in the Chinese market.

As a new species, two main "landmines" in the e-cigarette industry appear in how to prevent minors from purchasing and how to ensure quality and safety.

On the other side of the ocean, Juul, founded in 2017, once became one of the most valuable startups in the U.S. However, due to its failure to take effective measures to prevent minors from purchasing, Juul's market value plummeted by 70% in two years, from $38 billion to $10 billion, amidst public criticism in the U.S.

Meanwhile, the "e-cigarette lung disease deaths" incidents in the U.S. in 2019 triggered a wave of social panic. According to the final investigation by the Centers for Disease Control and Prevention (CDC), the e-cigarettes used by these lung injury patients were illegal products circulating on the black market, containing illegal vitamin E acetate. Regular nicotine e-cigarette products do not contain this substance.

However, in the Chinese market, timely supervision will minimize these "landmines" before they occur. This is also a prerequisite for RELX's successful entry into the capital market.

Regarding the protection of minors, as early as August 28, 2018, the State Administration for Market Regulation and the State Tobacco Monopoly Administration issued a notice prohibiting the sale of e-cigarettes to minors, clearly stating that various market entities must not sell e-cigarettes to minors. On November 1, 2019, the two agencies issued a notice further protecting minors from e-cigarette harm, urging e-cigarette companies not to sell online.

Subsequently, the two agencies jointly conducted a two-month special inspection of the e-cigarette market in July 2020 to strictly investigate the sale of e-cigarettes to minors. In November, "prohibiting the sale of e-cigarettes to minors" was written into the newly revised "Minor Protection Law."

Due to consistent regulatory measures, most companies have made "ensuring compliance" the most important premise for their subsequent development. The disorderly expansion of the e-cigarette industry has been effectively curbed, and there is no phenomenon of selling illegal products on the black market.

It is certain that the storm caused by American e-cigarette brands overseas will not be repeated in China.

This can be glimpsed from the data of the Chinese Center for Disease Control and Prevention. According to the latest paper from The Lancet Public Health, e-cigarette users in China are primarily male smokers who are addicted to cigarettes and wish to quit smoking. Those who choose e-cigarettes to understand the harm of smoking account for less than 4%.

(Image: The Chinese Center for Disease Control and Prevention released the results of "E-cigarette Use Among Chinese Adults: Results from Multiple Cross-Sectional Surveys in 2015-2016 and 2018-2019")

On the other hand, the current regulatory environment also provides e-cigarette companies with opportunities to demonstrate social value. During the pandemic, RELX established a 20 million yuan assistance fund to help stores recover and created over 120,000 jobs.

With the continued healthy development in the future, the employment and entrepreneurial opportunities brought by the e-cigarette industry cannot be underestimated.

The open and transparent capital market will make RELX more self-disciplined.

Like many emerging industries, the e-cigarette industry has experienced an evolution from chaos to gradual regulation, eliminating many non-compliant and red-line market behaviors. In this context, RELX's listing not only supplements capital and enhances strength but also recognizes the industry's credit enhancement. #p#分页标题#e#

(Image: RELX's Sunflower System has achieved 100% coverage in specialty stores nationwide, requiring customers to scan a code for age verification before purchasing.)

Currently, RELX is leading the industry into a phase of healthy competition, focusing on social responsibility as well as quality and safety. Regarding the protection of minors, RELX's intelligent age verification system, the "Sunflower System," has achieved 100% coverage in specialty stores nationwide. The "RELX Specialty Store 3C Management Regulations" also prohibit the sale of e-cigarettes to minors and establish red-line regulations to minimize the purchase of e-cigarettes by minors.

In terms of product quality, RELX has established an in-depth supply chain and quality management system, and has formulated strict corporate standards for vaporizing liquids based on national standards related to food safety.

([RELX invites UFC (Ultimate Fighting Championship) world champion Zhang Weili to serve as the "Guardian Program Charity Ambassador."])

According to the prospectus, the funds raised from RELX's IPO will also continue to be used for research and development and scientific research, strengthening distribution and retail networks, and improving supply chain capabilities.

Listing in the U.S. is just a small step. The investment market is open and transparent, and the external pressure from investors voting with their feet will create greater constraints. This constraint can have a significant impact on RELX and the entire industry, and also provide clear evidence for regulatory agencies to continuously introduce relevant policies.

RELX has become the most valuable e-cigarette brand globally and is expected to become an internationally recognized brand.

On its first day of trading, RELX's market value reached $45.8 billion, making it the most valuable e-cigarette brand in the world.

On one hand, the high valuation given by the capital market reflects optimism about the market growth potential of e-cigarettes and confidence in the continued promotion of healthy development by Chinese regulations; on the other hand, it also reflects investors' expectations for the rise of domestic brands in China.

However, analyzing the distribution of the industrial value chain from the perspective of the Dalian RELX e-cigarette specialty store, China is currently the world's largest e-cigarette production base, with an export value of 76.585 billion yuan in 2019. The global e-cigarette market has consistently shown an industrial pattern of "China manufacturing, Europe and America consuming," but China still remains absent in establishing strong brands and participating in international brand competition.

Just like the explosive development of smartphones and other categories in recent years, when the advantages of industrial chain clusters collide with strong demand, the e-cigarette industry also contains opportunities for independent brands to rise. If managed properly, the domestic and international markets can complement each other, potentially transforming the e-cigarette industry in China from "Made in China" to "China's manufacturing" and quickly giving birth to a major international brand.

However, the prerequisite for "China's smart manufacturing" to go global is the accumulation of technological strength. For a long time, the "OEM" production model has been prevalent in the e-cigarette industry, but RELX has broken this model. It is understood that RELX has mastered the entire industrial chain from design and R&D to manufacturing, combining its capabilities with the advantages of China's manufacturing industry. While developing, it also promotes the upgrading of the industrial chain.

(Image: RELX has established life science laboratories and physical and chemical laboratories to increase research investment in electronic vaporization.)

In the absence of systematic scientific research in domestic atomization, RELX has established physical and chemical laboratories and life science laboratories, and strengthened research investment by establishing a global scientific research platform, leading the industry to expand the cognitive radius of electronic cigarettes.

The "Beijing News" published "Insights into the Value of China's E-Cigarette Industry 2020" points out that unlike Xiaomi, Huawei, and other brands that rely on substantial domestic consumption to build strong brands and then expand into international markets, if the e-cigarette industry can leverage the unique advantages of its supply chain system and continue to innovate technologically, it can rapidly enhance its position in the global market and also provide reference for other Chinese brands going abroad.

Currently, RELX has begun to enter international markets, targeting products that align with local user habits. In Canada, Spain, the UK, Southeast Asia, and other countries and regions, this Chinese brand also possesses a certain level of market competitiveness and brand recognition. Reports indicate that local Chinese communities affectionately refer to RELX as the "light of domestic products."

RELX's listing in the U.S. is a phased victory for the domestic e-cigarette industry and marks a new step for strong local brands to go overseas.

However, for the transitioning e-cigarette industry, this is just the beginning. RELX's strict self-discipline, continuous technological innovation, and quality improvement, under the premise of regulatory compliance, remain crucial for gaining more recognition and creating greater value. After all, a true "international brand" typically requires decades or even centuries of accumulation. For RELX, which has been established for over three years, the test has just begun. #p#分页标题#e#