2FIRSTS | China Further Tightens E-Cigarette Capacity and Investment Controls, Supply Chain Faces Stronger Regulation and Accelerated Shakeout
China is strengthening regulations on e-cigarette production and investment to address oversupply and disorderly competition within the industry.Summary
China’s State Tobacco Monopoly Administration (STMA) has announced new policies to tighten controls over e-cigarette production capacity and investment, aiming to curb oversupply and “involution-style” competition. These measures include restricting new projects, stabilizing existing capacity, and increasing oversight of production adjustments. Regulators intend to accelerate the exit of non-compliant producers and encourage consolidation among compliant enterprises.
The policy focuses on stricter investment oversight, prohibiting new production projects and limiting capacity expansion. Approved production capacity will remain stable, requiring re-approval for any adjustments. Annual production volumes will also be controlled to prevent competition. The STMA will establish mechanisms for phasing out outdated capacity and optimizing industry structure through updated standards and licensing.
According to Alan Zhao, CEO of 2Firsts, these measures will likely accelerate supply chain consolidation, favoring compliant firms and increasing market concentration. The policy also addresses export violations and emphasizes the need for international cooperation to combat illicit trade, potentially impacting global markets and requiring international brands to enhance supply chain monitoring.
(Source：2Firsts)
