Recently, RLX Technology updated its 20-F report (the annual report for non-US companies) on the US SEC website on April 19. This report, enriched with details about the company’s overseas operations, revealed significant insights compared to the earlier 2023 annual report.
On March 15, RLX Technology disclosed its total revenue for 2023, amounting to 1.586 billion yuan. The latest 20-F report breaks this revenue down by region, with the Chinese market accounting for approximately 1.358 billion yuan and overseas markets generating around 229 million yuan. This means that in 2023, RLX Technology’s overseas revenue accounted for 14.4% of its total revenue.
Unique Corporate Structure of RELX
“RELX,” a well-known e-cigarette brand, was established by RLX Technology in January 2018. RLX Technology operates the RELX brand, similar to the relationship between “WeChat” and “Tencent.”
Officially, RELX began exploring international markets in 2019 and established a new company, RELX International, in 2021 to handle its overseas operations. This included launching the WAKA brand of disposable e-cigarettes for international markets in November 2021.
RLX Technology and RELX International signed a non-compete agreement on December 15, 2020, which allowed each entity to operate independently in their respective markets. Thus, RLX Technology handles the RELX brand’s operations in China, while RELX International manages the RELX and WAKA brands outside China.
Stock Market Dynamics
On January 22, 2021, RLX Technology went public on the NYSE under the ticker “RLX,” becoming the first Chinese e-cigarette brand to be listed. Notably, RELX International was not integrated into RLX Technology at the time of the IPO, and its financials were not consolidated into RLX Technology’s financial reports. This separation may have been due to the nascent stage and the losses of RELX International’s operations, along with the uncertainties in its largest market, the United States.
Strategic Acquisitions and Expansions
In a complex transaction detailed in a July 10, 2023, announcement by Boton Group in China, RLX Technology acquired several vaping-related businesses in December 2023 to drive international expansion. These acquisitions included 100% stakes in SS North Asia Holding Limited and its subsidiaries (“SS North Asia“), Sunnyheart HK Limited and its subsidiaries (“Sunnyheart“), and Relx Indonesia Holding Inc. and its subsidiaries (“Relx Indonesia“).
These acquired companies primarily operate in the vape product sales in North Asia and Southeast Asia. Both the company and the acquired entities were controlled by Ms. Wang Ying (Kate).
This strategic move, costing approximately 173 million yuan, brought in an overseas revenue of 229 million yuan for RLX Technology.
Future Directions
With the termination of the non-compete agreement with RELX International in the third quarter of 2023, RLX Technology is now free to enter markets previously reserved for RELX International. During the Q3 earnings call, it was revealed that the listed company would gradually transition to using the brands “RELX” and “WAKA.”
This strategic realignment suggests that RLX Technology is increasingly integrating its overseas operations into the listed entity, potentially diminishing the role of RELX International.
