Tag: RLX Technology

Revenue Down as RLX Adjusts to New Rules

Photo: RLX Technology
RLX Technology reported net revenues of RMB2.23 billion ($333.5 million) for the second quarter of its fiscal year 2022 compared with RMB2.54 billion in the same period of 2021. Gross profit was RMB977.9 million compared with RMB1.15 billion in the comparable 2021 period.
The company attributed the decrease in net revenues primarily to the suspension of store expansions and new product launches to comply with regulatory requirements.
Chinese authorities have recently moved the vapor business under the regulatory framework for tobacco products. E-cigarette manufacturers now require operating licenses from the State Tobacco Monopoly Administration (STMA) while vapor products must satisfy various standards and technical requirements before entering the market.
On June 10, 2022, one RLX Technology subsidiary obtained an STMA license to manufacture e-liquids. On July 22, 2022, another subsidiary was licensed to own the RELX brand and manufacture RELX branded e-vapor rechargeable devices, cartridge products and products sold in combination with e-vapor rechargeable devices and cartridge products.
“Over the past several months, we have made meaningful strides in adapting our business and product development to the new regulatory framework,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement. “Specifically, we have obtained the License for Manufacturing Enterprise and received regulatory approvals for some of our new products, demonstrating our operational excellence and industry-leading R&D capabilities.”
“In light of the regulatory changes, we are off to a slow start of the sales of our new products that are compliant with the National Standards in the new transaction system mandated by the regulators,” said Chao Lu, chief financial officer of RLX Technology. “Despite the macro headwinds, we will continue to steadily focus on cost optimization while reinforc[ing] our product competitiveness under the new regulatory regime to create sustainable, long-term growth for our shareholders.”
September 21, 2022
RLX Obtains Chinese Manufacturing License

Photo: RLX Technology
China’s State Tobacco Monopoly Administration (STMA) has licensed RLX Technology to operate in the vapor business.
On Nov. 26, 2021, China’s State Council amended the country’s tobacco monopoly law to include vapor products, giving the STMA authority to regulate the sector.
The STMA license, which is valid until July 31, 2023, allows RLX Technology to manufacture 15.05 million rechargeable vaping devices, 328.7 million cartridges and 6.1 million disposable e-cigarettes per year.
Since the first quarter of 2022, Chinese authorities have issued a series of implementing rules and guiding opinions to strengthen oversight of e-cigarette products and regulate the e-cigarette industry. These rules and opinions set forth that all e-cigarette manufacturing enterprises must obtain a license from the STMA.
“This license represents an important milestone in our strategic roadmap as we strive to comply with the new regulatory requirements in a timely manner,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement.
“We believe that we are well-positioned to achieve compliance in our operations according to schedule. To adapt to the new market dynamics and ensure business development, we will, and will urge our business partners to, continue making efforts to comply with all applicable regulatory requirements, including, but not limited to, obtaining requisite licenses and regulatory approvals, developing products that meet the mandatory national standards, and processing all transactions via the National E-cigarette Transaction Platform when it is implemented.
“We will remain committed to providing high-quality products that deliver superior performance and safety in strict compliance with legal and regulatory requirements, while exploring new growth opportunities in the industry.”
July 24, 2022
Saudi Officials Trained to Fight Illicit Trade

Illustration: MyCreative
RELX International concluded a training session with Saudi Customs Authority and Saudi Authority for Intellectual Property officials on May 25. The training aimed to complement Saudi officials’ efforts in fighting the illicit trade of contraband and counterfeit e-cigarettes in the kingdom.
The training covered several key aspects: discerning legal products from illegal ones; raising awareness and educating people about the consequences of the illegal trade of e-cigarettes; sharing research and intelligence on identifying illegal trading activities; collaborating with government officials to track and confiscate counterfeit products; and developing and implementing product authentication, tracking and tracing technologies. To facilitate the effectiveness of the training, RELX International collaborated with leading intellectual property firm SABA IP.
As part of RELX’s ongoing commitment to protecting the rights of legal e-cigarette users, and fighting the illicit trade if e-cigarettes under the Golden Shield Program, additional training sessions are planned in the United Arab Emirates, Egypt and Jordan.
“As a responsible company, RELX frequently works with local authorities, investigation firms and e-commerce platforms to identify and remove contraband and counterfeit e-cigarette products from the market as part of the RELX Pledge,” said Robert Naouss, external affairs director, MENA & Europe at RELX International, in a statement.
“We are pleased to have been able to complete an in-depth training session with relevant Saudi authorities and applaud their tireless commitment to ensuring consumers in Saudi Arabia have access to authentic and reliable e-cigarette products at fair prices.”
RELX established the Golden Shield Program in August 2019 to help prevent the production and sale of the illicit goods. Since its establishment, the initiative has helped remove more than 550,000 fake products from the market, as well as over 77,000 websites.
May 31, 2022
RELX Stops Offering Flavors in Philippines

Photo: Aliaksandr Barouski
RELX International is no longer selling flavored vape products in its outlets throughout the Philippines, according to the Manilla Standard.
Republic Act No. 11467 and Joint Memorandum Circular No. 003-2020 prohibit the manufacture, importation, sale, and distribution of vapor products with flavoring other than tobacco or menthol in the country.
Signed by President Rodrigo Duterte on Jan. 22, 2020, the act increases the excise tax rates on alcohol, heated tobacco, and vape products to generate funds for the government to deliver quality and affordable health care services.
RELX said the move reflects its commitment to support important reforms that will benefit the collection of tax revenues while catering to legal-age adult smokers, preventing access of e-cigarette among minors, and ensuring responsible and standard-compliant e-cigarettes in retail points across the country.
May 30, 2022
RLX Results Impacted by Pandemic
RLX Technology reported net revenues of CNY1,71 billion ($270.4 million) for the first quarter ended March 31, 2022, compared with RMB2.4 billion in the same period of 2021. Gross margin was 38.3 percent, down from 46 percent in the same period of 2021. U.S. GAAP net income was RMB687.1 million, compared with a U.S. GAAP net loss of RMB267 million in the same period of 2021. Non-GAAP net income was RMB361.8 million, compared with RMB610.5 million in the same period of 2021.
“During the first quarter of 2022, we continued to focus on our core strategy and maintain our leading position in the industry while preparing for the anticipated regulatory changes,” said Ying (“Kate”) Wang, co-founder, chairperson and CEO of RLX Technology, in a statement.
“As the new regulatory framework has come into effect and detailed implementation measures have been released, we are proactively adapting our business to the new market environment by applying for the relevant licenses and developing qualified products that meet the requirements of the most recent national standards. We believe that, by leveraging our leading research and development abilities, we are able to launch market-leading products that conform to the national standards and satisfy our users’ needs.
RLX Technology attributed the decline in net revenues to the impact of the Covid-19 pandemic on its factory in Shenzhen, which limited the company’s production and shipment volumes.
“Our cash position remains solid, which will support us as we navigate the market dynamics and agilely adjust our business to the fluctuating macro environment,” said Chao Lu, chief financial officer of RLX Technology. “Looking ahead, we will remain focused on the business elements under our control, such as product innovation, cost optimization and operating efficiency, to reinforce our fundamentals and position ourselves to seize future opportunities. As always, we are committed to delivering sustainable growth for our shareholders in the long run.”
May 21, 2022
Kate Wang Resigns from RLX Committees

Ying (Kate) Wang (Photo: RLX Technology)
Ying (Kate) Wang has resigned as a member and the chairperson of the compensation committee and the nominating and corporate governance committee of RLX Technology’s board of directors to help the company comply with the relevant New York Stock Exchange’s listing requirements on board committees’ independence.
Wang is the co-founder, chairperson of the board of directors and CEO of RLX Technology’s.
Going forward, the compensation committee and nominating committee will be composed entirely of independent directors, namely Zhenjing Zhu and Youmin Xi, RLX Technology announced in a press note. Concurrent with Wang’s resignation from the compensation committee and the nominating committee, Xi was appointed as the chairperson of the nominating committee and the chairperson of the compensation committee.
April 11, 2022
China Mulls Ban on Flavored E-Cigarettes

Photo: Victor Moussa
China will ban nontobacco flavors in e-cigarettes if an updated draft of standards for the vaping industry becomes law, reports Shine.
In November 2021, China’s State Council amended the country’s tobacco monopoly law to include vapor products and requested public input on its proposed regulations for the segment.
While the original proposal appeared to permit nontobacco flavors, the new draft, published on March 11, underlines the importance of reducing the appeal of e-cigarettes to youth, stating: “Flavors other than tobacco taste shall not be offered in products.” To be specific, 21 additives, referring to tastes like plum, rose and orange, are removed from the list.
As some U.S. states and European countries already have flavor bans in place, industry experts believe the new regulations may have a greater impact on the domestic market rather than exports.
In an interview with Securities Times, an unnamed industry insider said sales volumes of tobacco-flavored e-cigarettes in the domestic market are dwarfed by other flavors.
The March 11 publication sent stocks of Chinese vapor companies tumbling. Shares of RLX Technology, which had just reported strong revenues for 2021, dropped more than 36 percent and closed at $1.49 on the New York Stock Exchange on Friday.
The updated draft is now available on the State Tobacco Monopoly Administration’s website. The administration is asking for public feedback until March 17.
March 13, 2022
RLX Net Revenue Jumps in 2021
Net revenues of RLX Technology increased by 123.1 percent to RMB8.52 billion ($1.34 billion) in fiscal year 2021. The increase was primarily due to an increase in net revenues from sales to offline distributors, which was mainly attributable to the expansion of the company’s distribution and retail network (China banned internet sales of vapor products in October 2019).
Gross profit increased by 140.4 percent to RMB3.67 billion while gross margin increased to 43.1 percent from 40 percent in the prior year.
For the fourth quarter of 2021, RLX Technology reported net revenues of RMB1.9 billion, up 17.7 percent from the comparable 2020 quarter. Gross margin was 40.2 percent compared with 42.9 percent in the same period of 2020.
“We are pleased with our operational and financial performance in the fourth quarter, ending 2021 on a strong note. Despite the evolving industry regulatory framework and challenging backdrop of recurrent Covid-19 outbreaks, we remained focused throughout the year on optimizing our distribution and retail channels, investing in scientific research, new product development and digitalization upgrades,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement.
“The 2021 fiscal year was defined by year-over-year revenue growth of 123.1 percent, further cementing our leadership as a trusted e-vapor brand for adult smokers. Looking ahead, we are confident that the company is well positioned to further explore the enormous potential of this vast yet growing industry and achieve future growth in 2022 and beyond.”
March 11, 2022
E-Cig Leaders Welcome China Tobacco Rules

Photo: Timothy S. Donahue
China’s recently announced regulatory framework for e-cigarettes should secure the vapor industry’s future in that country, according to leading players in the business.
On Nov. 26, China’s state council amended the tobacco monopoly law to include vapor products, meaning that, going forward, e-cigarettes will be managed like combustible cigarettes.
With more than 300 million smokers—27 percent of adults—China is the world’s largest tobacco market. It also produces about 90 percent of the world’s e-cigarettes, primarily in the technology manufacturing hub Shenzhen.
The government and the tobacco industry are, essentially, one entity in China, with the State Tobacco Monopoly Administration regulating the industry and China National Tobacco manufacturing tobacco products.
To date, the vapor industry in China has operated in a legal grey area. Regulation had been widely anticipated, but many feared that it would wipe out the sector. The Nov. 26 announcement, however, was welcomed by leading players in the business. Industry representatives say it removes uncertainty and will weed out bad actors.
In background article on the recent news from China, Filter cited Smoore global PR manager Frankie Chen, who expects national mandatory standards to significantly improve product safety and provide global vapers with better products.
“Since the standards set higher requirements for vaping manufacturing, it is expected that only the responsible manufacturer with comprehensive safety management can be compliant,” Chen was quoted as saying.
RLX Technology, too, welcomed the new regulatory framework. “We believe the sector will enter a new era of development—an era marked by enhanced product safety and quality, augmented social responsibilities, and improved intellectual property protection,” said RLX Technology chairperson and CEO Ying Wang at the presentation of the company’s third quarter results.
RLX Technology Chief Financial Officer Chao Lu said the company is well prepared for the new operating environment. “The investments we made in products, talents, research, and compliance in the third quarter and beyond will place us in advantageous positions under the new regulatory paradigm,” he said.
December 3, 2021
RLX Reports Lower Quarterly Revenues

Photo: Freedomz
RLX Technology today announced its unaudited financial results for the third quarter ended Sept. 30, 2021.
Net revenues were CNY1.68 billion ($260.2 million), representing a decrease of 34 percent from CNY2.54 billion in the second quarter of 2021.
Gross margin was 39.1 percent, compared to 45.1 percent in the second quarter of 2021. U.S. GAAP net income was CNY976.4 million, compared with CNY824.3 million in the second quarter of 2021.
Non-GAAP net income was CNY452.7 million, compared with CNY651.8 million in the second quarter of 2021.
“In the third quarter, we continued to develop our business through concerted efforts deepening our scientific research abilities, adding to our differentiated product portfolio, and enhancing our sustainability initiatives. We also strengthened our core capabilities by expanding our talent pool, optimizing our retail network and making digitalization upgrades to our operating infrastructure,” said Ying (“Kate”) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement.
“Looking ahead, with the formal confirmation of the amendment to the implementation rules of tobacco monopoly law announced last week bringing innovative tobacco products including e-cigarettes under the regulatory framework, together with the draft administrative measures for electronic cigarettes and the draft national electronic cigarette product standards announced earlier this week, we believe the sector will enter a new era of development—an era marked by enhanced product safety and quality, augmented social responsibilities, and improved intellectual property protection. These developments will pave way for long-term sustainable growth in this sector.”
“In the past quarter, we placed even more focus on investments in R&D, organizational upgrades and operational efficiency improvements in existing channels, shifting from the efforts on distribution network expansion in previous quarters,” said Chao Lu, chief financial officer of RLX Technology. “As a result, we have a richer product portfolio in the pipeline and healthier inventory levels across our value chain.”
“We believe our quarterly revenue drop was temporary, and the investments we made in products, talents, research, and compliance in the third quarter and beyond will place us in advantageous positions under the new regulatory paradigm. We expect these investments to yield steady and sustainable growth soon,” Lu added.

December 3, 2021