Lydia Ling: Thank you.
Operator: The next question comes from Eileen Lin with China Renaissance. Please go ahead.
Eileen Lin: Thanks, management, for taking my questions. I have two questions. The first one is on domestic market. Can management share some comments on the momentum of domestic sales by month? Is there any changes in the trend? In particular, I also want to get the sense of where are non-JV products now and what’s the latest trends onto this product from the regulator’s perspective. My second question is on the overseas market. UK government recently made some changes in the policies on the e-cigarettes, including restrictions on some disposable and flavored products. And there’s a new potential tax on e-cigarettes starting on 2026. Have you seen any changes in the market after this announcement and how do you think it might impact RELX? Thank you.
Sam Tsang: Thank you very much, Eileen. So regarding our domestic business, the sales trend in the domestic market are influenced by seasonality, with stable monthly averages observed over longer periods. For instance, in February this year, the Chinese New Year holiday lasted for eight days with minimal sales a few days before and after the holiday. We also had relatively strong sales in January before the CNY. We remain vigilant in monitoring the illicit markets and assist regulators in combating these challenges. Our commitment to compliance and market integrity supports regulatory efforts to secure consumption tax and can position us as leaders in promoting responsible market practices. Our proactive stance on compliance and collaboration with authorities will foster a healthier market environment and support sustainable growth.
So regarding your second question about the recent proposed policy in the UK. I think the UK regulatory changes could present a nuanced landscape, opportunities to adapt and capture new consumer segments. We can share our view on these three topics that you mentioned. First is the proposed disposable ban. As you have mentioned, the prohibition of disposables will not — as we have mentioned earlier, the prohibition of disposables will not change the overall demand in the long run as most users who migrates from disposables to other forms back to the pod system. There has been early signs that some distributors and retailers have started encouraging users to convert from disposables to pod system, which allow us to expand to the market and acquire new users in the medium term.
The ban may create short-term chaos in the market, just like what happened in the US and China, but we are well prepared for the changes. Second, regarding proposed vapor restrictions. British regulators have been encouraging adult smokers to switch from cigarettes to reduced-risk products like e-vapors. Regulators are concerned about appealing packaging, use of appealing flavor, and advertising, but at the same time, they also understand flavor’s role in adult smokers’ transition. In other words, products with plain flavors and packaging that are not marketed and appealing to minors shall not be restricted. We are confident that such restrictions should be reasonable and might have minimal impact on adult smokers. Finally, excise tax could level the playing field.
We have seen this introduced in many countries and regions, including the countries where we are currently operating. The current suggested tax rate is moderate compared to other countries globally. This would foster a healthier industry ecosystem and provide incremental incentives for regulators to combat illegal products. Thank you for your question.
Eileen Lin: Very clear. Thank you.
Operator: At this time, there are no further questions. I would like to turn the call back over to the company for closing remarks.
Sam Tsang: Thank you once again for joining us today. If you have further questions, please feel free to contact RLX Technology Investor Relations team through the contact information provided on our website or Piacente Financial Communications. Thank you.
Operator: This concludes the conference call. You may now disconnect your line. Thank you.
