Dr. Allen Liao, managing director, TobaccoChina Online.
On January 9, 2026, the STMA – China’s State Tobacco Monopoly Administration – issued the country’s first formal regulation governing literally any product containing nicotine: nicotine pouches, snus, chewing tobacco, nicotine inhalers, sprays, gums, lozenges, patches, capsules, pills e-liquids, and more. The framework came into immediate effect, without any transition or grace period granted. Based in Beijing, Dr. Allen Liao, long-time Tobacco Asia correspondent and managing director of local news portal TobaccoChinaOnline, closely followed the developments leading up to the new regulation.
Tobacco Asia (TA): Allen, let’s begin easy-peasy. Did the industry anticipate the STMA’s move or did it hit stakeholders by surprise?
Dr. Allen Liao (AL): I would say that for those closely watching policy trends, it wasn’t a surprise. The decisive signal actually came earlier, with the State Council last December 12 ordering a crackdown on illigal oral tobacco and nicotine activities.
STMA’s issuing of specific rules in January was merely an operational follow-through, as the direction and determination from the top down were already crystal clear. However, while major [industry] players’ compliance teams had been monitoring the signals closely and had started prepping, small- and medium-sized enterprises might have underestimated the speed and comprehensiveness of the enforcement, or they lacked the resources to track developments closely. So when the detailed actionable dropped, it hit them hard.
TA: Things seem to go very differently in China than in western nations. There, a government authority would embark on extensive consultations with stakeholders to eventually derive a new regulation or even rewrite an existing one. But in China, the planning of that new nicotine regulation appears to have not involved any stakeholder consultations at all. Instead, that new framework came out in mid-January and was put into immediate effect. Why was there no transition period?
AL: In my view, the decision to have no transition period comes down to three very practical reasons. Firstly and most importantly, it was about risk control. The market was getting a bit chaotic. You had all sorts of [nicotine] products, many with misleading marketing, and they were very appealing to young people. This was of huge concern [to the authorities]. If you gave a grace period, say a few months, what would have happened? Companies might have rushed selling off all their non-compliant stock – and that would have made the market even messier or much harder to regulate later on.
The second reason, I think, was that STMA was confident in its enforcement power. The tobacco monopoly system in China is a very powerful nationwide machine, so they believe that once the rules are set, they have the ability to enforce it almost overnight. And companies that wanted to be compliant were already watching the policy closely anyway and could, thus, adapt quickly. The third reason is about keeping pace with the global trend. I searched online for some information about other countries. The rules for oral nicotine products are getting stricter everywhere in the world. China doesn’t want to become a regulatory loophole, a place where products that are restricted elsewhere can be dumped.
TA: So in the end it’s a matter of China streamlining its regulatory framework for oral nicotine with those frameworks that already may exist elsewhere in the world, right?
AL: Yes. And when other places already enforce stricter regulations, China putting a similar framework into immediate effect sends a very clear and strong signal to companies that may seek to take advantage of a regional loophole.
TA: Does China’s new rules also apply to the special administrative regions of Hong Kong and Macau?
AL: The simple answer is, “No, they don’t apply.” STMA only has jurisdiction over Mainland China. Hong Kong and Macau are special administrative regions under the “One Country, Two Systems” principle, so they have their own separate legal and regulatory systems.
For example, Hong Kong already is very strict with nicotine products, even stricter than the Mainland. It generally treats them as pharmaceutical products and regulates them under its pharmacy and poisons ordinance. And then, and as you may know, Hong Kong also recently implemented its own ban on alternative smoking products, like e-cigarettes. Macau likewise has its own tobacco control laws, with its own definitions and control measures.
TA: The new framework seems to extend not only to all oral nicotine products, but also to nicotine-containing products such as nicotine patches…
AL: Yes, and actually the scope is broader than many people might think. The new framework covers all nicotine products. STMA’s announcements were very clear on this: any product containing nicotine that is used orally, nasally or transdermally and doesn’t produce smoke is classified as a smokeless tobacco product, and it must be regulated like cigarettes or tobacco. If a product of any form and shape contains nicotine, it falls under this new regulatory framework.
TA: As China’s government holds a defacto nationwide monopoly on manufacturing and marketing tobacco products. does that mean that anybody else who had manufactured nicotine gums, sprays, patches, or even pouches, and wasn’t able to become compliant quickly enough, now will effectively lose their business? Or will they have to apply for new permits that allow them to continue producing under the new rules?
AL: There already is the standard tobacco monopoly production license, which permits a company to manufacture cigarettes or cigars. But for oral nicotine products, that permit is now also required. So, it’s not a new or special category of license created for this particular type of products. STMA is now simply applying the existing licensing system for the tobacco industry on those companies as well.
TA: And if a company doesn’t have that license yet? Would it be the end of the road?
AL: Yes. The STMA-issued license is the ticket for you to remain in the game. Without it, there is nothing to discuss. Secondly, your product must be in full compliance with the national standards. These cover everything, from maximum nicotine content, the list of permitted ingredients, to the compulsory health warnings on the packaging, where every detail must be followed exactly.
TA: And those that already have that STMA license; are they safe?
AL: Yes, they are. They have the right to produce – or continue to produce – their nicotine products. And if they don’t, they can still apply, but their production must lay dormant until they have obtained it. It’s all quite straightforward, really.
TA: How about suppliers of raw materials that are used in the manufacturer of these nicotine products? Are they affected in any way?
AL: Yes, they are. This new regulation is like a mandatory compliance cleanup. So, the entire landscape of the supply chain has been completely reshaped. For example, the positions of qualified suppliers, those who were already supplying to China Tobacco, are now more secure. But if they also supply non-China Tobacco companies, they must now be extra careful to only sell their raw materials to manufacturers that hold a valid tobacco monopoly license. In the short term, they might see some fluctuations as their downstream clients are reshuffled. But in the long run, their relationships with the licensed players will stabilize.
TA: Don’t these tightened controls bear the danger of considerable investment outflows, as companies may opt to move their manufacturing bases abroad?
AL: If you are an unqualified supplier or manufacturer, you have very few options. Either you try to become a supplier to licensed companies, which has a very high entry barrier, or you completely pivot to serve the export market, or you simply exit this business entirely, or you build up a new manufacturing [facility] in a foreign country. We are already hearing that some small and medium enterprises are considering or planning to move their factories to places like Indonesia, the Philippines, or the Middle East, where regulations are more relaxed for them. This is a matter of survival. So, yes.
TA: Would you say the outlook in the long run is good, or will these regulations spell the end of China’s oral nicotine product sector?
AL: It is not destroying anything. Those who contemplate relocating overseas will require a huge amount of capital and local resources. It’s not an easy choice for small- and medium-sized companies. I believe the more likely scenario is that a small number of financially capable companies will move out, but for the majority of companies that cannot adapt to the new rules, the end result will be closure or consolidation – or they have to adapt and get licensed. In the end, it is going to clean up the industry. For those who cannot comply or are unwilling to comply or for any other reason are not able to adjust to these new rules, it’s the end of the road. And the others, they will come out stronger and better equipped and with higher quality standards. From my perspective, it’s not a total tragedy. It’s a chance. It’s an opportunity for experienced players. They will have the chance to market their products in China.
TA: And local end consumers? What do they get out of this shakeup?
AL: The end user gets the reassurance that the products they buy will not be substandard, that they will be safe, and that they are legal. They also will have the freedom to choose from more products in the market. So, it’s good news for consumers, actually.
Visit https://www.tobaccoasia.com/podcasts/podcast_51_Allen_Liao_TobaccoChina/ for the full interview with Dr. Allen Liao.