China Rules to Require Industry Licensing

China’s State Tobacco Monopoly Administration issued new draft rules governing e-cigarettes on Dec 1, reports Reuters. The move follows a decision by China’s cabinet last week to give the country’s tobacco monopoly oversight over the e-cigarette business.

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 license 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.

China’s e-cigarette sector has been growing rapidly following the international success of vapor products. Market leader RELX Technology went public in New York in January.

The vapor business in China operated in a legal grey zone thus far. Analyst had been expecting the government to assert control over the sector for some time now, and the recent announcements end months of speculation over what regulations might look like.

China’s cigarette industry works 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.