China issues draft rules to control e-cigarette production

A saleswoman holds an e-cigarette as she demonstrates vaping at the Vape Shop that sells e-cigarette products in Beijing, China January 30, 2019. REUTERS/Thomas Peter

SHANGHAI, April 25 (Reuters) - China's tobacco regulator on Monday issued draft rules to strictly control e-cigarette production, as it tightened oversight of the industry.

The State Tobacco Monopoly Administration said it would "reasonably" control the scale of e-cigarette production capacity to prevent overcapacity.

Foreign investment in the retail of e-cigarette products would be banned, the regulator said, and it would review foreign investment in production, requiring e-cigarette firms that want to list in China or abroad to obtain pre-approval.

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China has in recent months been tightening its scrutiny of e-cigarettes, and last year amended its tobacco monopoly law to include such products. Since then, it has ruled that e-cigarette companies may only sell their products through authorised channels, and barred vendors from selling e-cigarette flavours other than tobacco.

Earlier this month, it unveiled technical standards for such e-cigarettes as well.

A number of Chinese companies manufacturing and selling nicotine salt-based e-cigarettes for the domestic market emerged in 2018 following the success of similar products overseas.

The largest of them, RELX Technology Inc (RLX.N), went public in New York in January.

China's cigarette industry operates 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.

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Reporting by Brenda Goh; Editing by Edmund Blair and Bernadette Baum

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