License Renewal Update: Completed as Early as January, Valid for 2 Years, with More Flexible Quotas

On June 9, the official website of the National Tobacco Monopoly Administration released a notice regarding the commencement of the license renewal process for e-cigarette production enterprises, which has attracted the attention of many industry practitioners. The renewal process for e-cigarette companies has officially started.

Ge Wu has also spoken with several upstream supply chain personnel and reached the conclusion that over 40 national standard brands have a strong willingness to renew their licenses, and the vast majority of companies are expected to renew successfully without any issues.

Renewal completed in one month; violations will be closely monitored

According to several relevant individuals, as long as the necessary documentation is prepared, the entire renewal process is quite efficient. From submitting documents to receiving the new license, it takes about one month. Since last year's licensing time was generally in early July, most of the first batch of renewing companies are expected to receive their new licenses by the end of July this year, with the rest likely completing the renewal by August.

According to relevant individuals, this renewal process does not impose excessive assessments. “As far as I know, I haven't heard of any company that applied for renewal but ultimately failed,” a representative from a brand revealed to us: “Basically, if you submit, it’s okay.”

However, another unverified source indicated that several brands, despite successfully renewing their licenses, have been placed under “close observation” during the process—meaning their business activities will be closely monitored afterward due to violations after the transition period.

According to him, violations mainly focus on two categories. First, fruit-flavored products entering the domestic market. Most are products originally exported overseas that have illegally re-entered the domestic market, involving both willful violations and unauthorized re-entry from warehouses.

Second, there are violations related to promotional activities. The focus is on promotional policies like “buy pods, get pods free” (with atomizers and nicotine being closely regulated products, while e-cigarette devices are relatively less severe). Promotional activities should not use platform products as giveaways.

Most renewals are valid for 2 years, with more flexible quotas

According to information from several individuals, the new licenses after renewal are almost all valid for 2 years. Relevant individuals have indicated that, based on what they know, competitors also have licenses with a validity of nearly 2 years.

Not only the validity period has changed, but also the quotas. It is understood that the new licenses after renewal no longer specify the exact quantities of pods and devices in the “production scale” section, but instead state “not exceeding the data approved by the National Tobacco Monopoly Administration.”

Does this mean the quotas have been exhausted or new quotas have been activated? In response to this question, relevant individuals stated that this is not the case: since the quotas set during the first licensing are mostly still sufficient, setting new quotas is actually meaningless. Therefore, within the new cycle, if any company can consume its previous quotas while operating in compliance, it can submit an application for renewal.

According to relevant individuals, although the overall national standard market remains very limited, the willingness of companies to renew their licenses is still very high. Because, in everyone's view, the industry has only been fully compliant for a little over a year, and all parties are still exploring and adjusting. So even though the current national standard market size is very limited, if the market further warms up in the future, the value of this qualification will significantly increase.

Summary: Two out of ten stores are fighting for survival; how long can subsidies last?

From the conversations Ge Wu had with several relevant individuals, it appears that for compliant companies, under efficient, convenient, and friendly renewal services, the renewal process itself does not consume much energy, and more attention is still focused on improving market performance.

“Getting onto a platform in a province is just the first step of a long journey,” a brand representative analyzed: “The real challenge is how to persuade local store owners to order your products on the platform; that’s the hardest part. My data shows that only about 20% of store owners place orders weekly.”

According to unverified data provided by him, about 80% of currently operating e-cigarette stores are in a “survival crisis,” while the remaining 20% have found the keys to successful operation and have become the “darling” of various brands. Each brand offers substantial subsidies to attract these 20% of stores, hoping to leverage them to reach more end customers.

“These stores will promote whichever brand is funding them. But if you think they will develop loyalty to your brand after the subsidies stop, you’re mistaken,” he pointed out the current dilemma faced by brands.

From the above situation, it is clear that the relevant regulations, as mentioned in the “renewal notice,” emphasize “optimizing services” and “dynamic management,” and will make corresponding adjustments based on market realities, maintaining the tone of compliant and orderly industry development. Therefore, Ge Wu reiterates that “confidence is more important than gold.” We will continue to monitor the domestic market. #p#分页标题#e#