[중국 창업 부자] A woman in her thirties who topped the e-cigarette market in 3 years

Enter 2021.01.27 11:20 | Revision 2021.01.27 11:21

China’s largest e-cigarette manufacturer, RLX Technology, was listed on the U.S. stock market after three years of its founding, and a rich man founded in China in the 1980s was born again. RELX, an e-cigarette brand made and sold by RELX, has a market share of 63% in China. Founder Wang Ying (汪瑩, Kate Wang, 39) jumped into the e-cigarette market in his 30s and quickly jumped the company to the top in the industry.

RLX was listed on the New York Stock Exchange (NYSE) on the 22nd and raised $1.4 billion (about 1.4 trillion won). On the first day of the transaction, the stock price closed at $29.51, up 146% from the offering price ($12). On the day of listing, the market capitalization amounted to $45.8 billion (about 50 trillion won). It is more than four times the market capitalization of KT&G listed on the Korean securities market (11 trillion won on the 26th). RLX shares closed at $24.04, down 15.20% on the 26th, the third trading day.

RLX is a company founded in Shenzhen, Guangdong Province in January 2018 by Wang Ying, who led the Chinese business of Uber, an American vehicle calling service company. After graduating from the Department of Economics and Trade at Xian Jiaotong University in Shaanxi Province, Wang Ying began working at P&G, an American household goods company. After earning an MBA degree from Columbia University in 2013, he worked as a consultant at Bain & Company for a year.

Since 2014, he has been the CEO of Uber China, Uber’s Chinese division. At that time, Uber and Didi Chuxing, China’s largest vehicle calling service company, were in fierce competition for the Chinese market. Eventually, Didi Chushing acquired UberChina in 2016. Later, Wang Ying also moved to Didi Chuxing to become the head of the Uber division.

Wang Ying is a smoker. It is said that since 2017, he decided to start an e-cigarette company and conducted market research. According to an interview with Chinese media, he thought that he should make it himself while using electronic cigarettes released at the time such as IQOS. He said, “I decided that the growth prospects of the Chinese e-cigarette market were bright, and I started a company by combining my experience and resources.”

Wang Ying founded the company with six colleagues who worked with Uber and Didi Chushing. It is said that in the beginning, each person paid 9,000 yuan (about 1.5 million won). Currently, Wang Ying is the Chief Executive Officer and Chairman of the Board of Directors.

According to the investment prospectus submitted by RLX to the Securities and Exchange Commission (SEC), Wang Ying, the largest shareholder, has a 54.3% stake after listing. Based on the closing price on the date of listing, Wang Ying’s equity valuation amounted to $24.8 billion (about 27 trillion won). Co-founders Zhang Long (9.2%) and Wen Yilong (6.0%) also became billionaires by listing. Major investors such as Sequoia Capital China, IDG Capital, and Source Code Capital are also expected to generate significant investment gains.

China is also the world’s largest market for tobacco. According to RLX’s prospectus, in 2019, the adult smoking population in China was about 288.67 million. Compared to regular cigarettes, fewer smokers of e-cigarettes. The proportion of e-cigarettes in the United States is 32.4% of all smokers, while the proportion of e-cigarettes in China is only 1.2%. This is why we see the potential for expansion of the Chinese e-cigarette market.

RLX’s sales surged year by year. In 2018, the first year of its founding, annual sales were 133 million yuan (about 22.6 billion won). In 2019, sales increased to 1.549 billion yuan (about 2642 billion won). It made a surplus in one year. In October of that year, a crisis hit the company. The Chinese government has banned e-cigarette sales and advertisements online due to concerns about the harmfulness of e-cigarettes. Sales in the fourth quarter declined QoQ for the first time.

RLX responded by reorganizing the distribution network centering on offline stores. The proportion of online and offline sales before the enforcement of the new regulations was 31% and 69%, respectively. Currently, the proportion of offline sales has risen to more than 98%. Despite the coronavirus pandemic last year, the number of stores increased by more than 1,000 in the first half alone. RLX announced in January last year that it will open an additional 10,000 stores over the next three years.

Sales also rebounded. Sales in the first to third quarters of last year (January to September) were 2,21 billion yuan (about 3754 billion won). During this period, the net profit was 18.6 million yuan (about 18.5 billion won). Currently, RLX’s share in the Chinese electronic cigarette market is 63%.

Earlier, Chen Ziping, 45, founder of Smoore International, another electronic cigarette manufacturer in Shenzhen, China, became a wealthy start-up in July last year when he made the first listing on the Hong Kong stock market in the electronic cigarette industry. Smooth International’s stock price (closed at HK$80 on the 26th) has risen more than five times compared to the public offering price (HK12.40). As of the 27th, Chen Ziping’s net assets amounted to $20.8 billion (about 23 trillion won).