AI asks: How is Fog Chip Technology responding to risks amid tightening global regulations?

Text / Yi An

Editor / Zhang Xiao

On March 13, Fog Chip Technology released its unaudited financial results for Q4 and the full year of 2025.

For the full year of 2025, Fog Chip Technology achieved a net revenue of 3.958 billion yuan (RMB), a year-on-year increase of 44.0%; under non-GAAP measures, adjusted net profit was 1.162 billion yuan, up 23.5% year-on-year.

Behind this strong performance recovery, Fog Chip Technology has already emerged from its trough, with the core driving force being the overseas market.

Among these, Fog Chip Technology’s performance in the fourth quarter of last year was particularly impressive. Quarterly revenue reached 1.141 billion yuan, a 40.3% increase year-on-year. The proportion of international market revenue in the fourth quarter also increased to 76.5%.

Looking back, two years ago, Fog Chip Technology, which was once on the brink of life and death, had no choice but to seek survival abroad. Today, its overseas revenue not only saw significant growth but also made it the first Chinese e-cigarette company to establish a foothold in the international market.

However, from the current development of the global e-cigarette industry, while overseas markets have opened broad growth opportunities for Fog Chip Technology, they also bring new challenges.

01

Two Years of Going Global, Fog Chip Technology Completes “Skyrocketing” Recovery

Founded in January 2018, Fog Chip Technology’s revenue in its first year already surpassed 100 million yuan, followed by over 1.5 billion yuan in the second year, and reaching 3.82 billion yuan in the third year.

In January 2021, Fog Chip Technology listed on the New York Stock Exchange, with a market capitalization exceeding $45.8 billion (approximately RMB 300 billion) on its first day, earning the title of the “Number One Chinese E-cigarette Stock.”

That year, Fog Chip Technology’s annual revenue reached 8.5 billion yuan, with profits exceeding 2 billion yuan, and a net profit margin of 23%.

But challenges arrived quickly. On October 1, 2022, China officially banned the sale of flavored e-cigarettes except tobacco flavor; on November 1, e-cigarettes were officially included in the scope of consumption tax; subsequently, regulators also prohibited online sales of e-cigarettes.

Under multiple regulatory policies, Fog Chip Technology’s “skyrocketing” profits came to an abrupt halt, and its performance entered a prolonged slump. In 2023, the company’s revenue plummeted to 1.634 billion yuan, a 72.5% decrease year-on-year, with its stock price continuously falling, and market value dropping over 90% from its peak.

Moreover, industry reshuffling accelerated, with many small and medium-sized e-cigarette companies forced out of the market for failing to meet compliance standards. Although Fog Chip Technology managed to stay in the game thanks to its compliance advantages, it faced multiple pressures such as shrinking demand, channel restructuring, and product transformation, leading to a development downturn.

Image / Official WeChat of RELX

At this critical juncture of life and death, Fog Chip Technology had no choice but to take “going overseas” as its breakthrough strategy. After a year of exploration, its overseas business began to show results in 2024. During this year, the company’s overseas revenue saw a substantial year-on-year increase, with total revenue rebounding to 2.75 billion yuan and net profit reaching 550 million yuan, marking an initial recovery in performance.

Entering 2025, the results of Fog Chip Technology’s transformation became even more evident, with both revenue and profit achieving double-digit growth, setting the best performance since the tightening of regulations in 2022.

It can be said that through two years of overseas expansion, Fog Chip Technology not only emerged from the “valley,” but also successfully opened a second growth curve abroad.

Looking from domestic to international markets, after two years of performance recovery, Fog Chip Technology has become a typical “quietly making big money” industry leader.

First, let’s look at the domestic market.

From 2022 to 2023, China’s e-cigarette industry experienced a major reshuffle under strict regulation. As of January 2025, about 583 companies held e-cigarette production licenses nationwide. Fog Chip Technology not only successfully obtained its license but also remains at the forefront of the industry.

Data shows that even after the industry underwent major changes in 2023, Fog Chip Technology maintained its dominant position in the domestic market, accounting for 88.30% of China’s e-cigarette market share in 2023. Industry insiders believe that despite the sluggish development of the domestic e-cigarette industry in recent years, RELX (Fog Chip Technology), with its early-established brand and channel advantages, still holds a leading position in the market.

After the financial report was released on March 13, Wang Ying, founder, chairman, and CEO of Fog Chip Technology, stated that as regulation in mainland China continues to improve, the competitive environment for compliant companies is getting better, and the company’s business in mainland China is showing signs of a gentle recovery.

Focusing again on the overseas market, according to data from Qianzhan Industry Research Institute, in the global e-cigarette market share ranking, Elf Bar (including Elf Bar and Lost Mary) leads with approximately 8.4%, but Fog Chip Technology’s main brand “RELX” already accounts for 1.7% of the global share, ranking third and securing a position in the international market.

Currently, Fog Chip Technology has established a multi-layered overseas layout with “building a foundation in Southeast Asia, expanding in the Middle East, and preparing in Europe.” The coordinated development across different regional markets provides strong support for its sustained overseas growth.

Regarding its international business, Wang Ying once said in the financial report that in 2025, the company aims to achieve significant and high-quality growth. Over the past year, Fog Chip Technology has continuously promoted its globalization strategy, with international operations maintaining rapid development, becoming the core driver of the company’s overall growth.

CFO Lu Chao also stated that the revenue growth in 2025 mainly comes from the continuous expansion of international markets, the synergy effects of strategic investments, and the mild recovery of the Chinese mainland market.

02

Hidden Concerns Remain, Challenges Persist

Despite impressive financial data and a compelling transformation story, Fog Chip Technology’s globalization journey is not without difficulties. Behind the bright numbers, many unknown challenges still lurk.

One of the biggest uncertainties and main obstacles to its overseas expansion is the vastly different regulatory policies across countries.

From a global trend perspective, regulations on e-cigarettes are becoming increasingly strict and differentiated.

Some countries adopt a “zero tolerance” approach, implementing comprehensive bans.

For example, Vietnam has completely banned the production, sale, and use of e-cigarettes and heated tobacco products from January 1, 2025, ceasing related import procedures; Azerbaijan will fully ban the import, export, production, storage, and sale of e-cigarettes and their components starting April 1, 2026.

Such comprehensive bans will directly cut off Fog Chip Technology’s business space in these markets. Without prior strategic adjustments, the company could face huge losses.

Other countries adopt “partial restrictions” or “regulated access” policies, which, while not outright bans, impose strict requirements on product categories, flavors, and sales channels, increasing operational costs and compliance difficulties for companies.

For example, the UK, starting June 1, 2025, will prohibit online and offline sales of disposable e-cigarettes, only allowing the sale of reusable electronic cigarettes. Previously, disposable e-cigarettes were a core product for many Chinese brands’ overseas expansion.

Furthermore, the US’s PMTA (Premarket Tobacco Product Application) certification remains a “life-or-death” hurdle for overseas e-cigarette companies. Companies must submit sufficient data and testing reports to the FDA to prove their products are “appropriate for the protection of public health” to gain marketing approval.

Since 2020, the FDA has issued marketing denial orders for 99% of PMTA applications. Fog Chip Technology is still working on obtaining its US PMTA approval, and whether it can succeed remains uncertain. As the largest e-cigarette market globally, the US’s market access will directly impact Fog Chip Technology’s international expansion success.

Image / Official WeChat of RELX

In addition to regulatory uncertainties, intense industry competition also poses significant pressure on Fog Chip Technology’s global development.

Objectively, the e-cigarette industry has relatively low technological barriers, with severe product homogeneity. Whether in form, core functionality, or appearance, products are easily imitated, leading to fierce competition mainly focused on price, channels, and brand marketing, which continually compresses profit margins.

Especially in overseas markets, many Chinese e-cigarette brands are accelerating their expansion, becoming major competitors to Fog Chip Technology. They often adopt low-price strategies to capture market share, further squeezing Fog Chip’s survival space.

Moreover, supply chain companies like Smoore International are also starting to launch their own products, which will become future competitors for Fog Chip Technology.

At the same time, the rapid pace of product iteration in the industry means that the rise of disposable e-cigarettes once disrupted the traditional replaceable pod market. Now, restrictions on disposables in various countries are pushing the market toward reusable products. If Fog Chip Technology cannot keep up with product innovation and quickly launch new products that meet market demands, it risks falling behind its competitors.