RLX Technology Inc. (RLX): Business Model Canvas [Dec-2025 Updated]

You're looking for the real story behind the company's pivot after the domestic regulatory squeeze, and honestly, it's a masterclass in capital efficiency and global execution. As someone who's mapped these transitions for years, I can tell you the 2025 canvas shows a clear shift: international markets are now driving the bus, accounting for over 70% of the RMB1,129.3 million in Q3 net revenue. What's key is their fortress balance sheet-holding about RMB16.4 billion in financial assets-which funds their aggressive Research and Development (R&D) and that crucial European equity investment. This model isn't just surviving; it's actively reshaping itself around global compliance and new product categories like modern oral nicotine. Dive into the nine blocks below to see exactly how they're structuring this next chapter.

RLX Technology Inc. (RLX) - Canvas Business Model: Key Partnerships

You're looking at how RLX Technology Inc. builds out its global reach, and partnerships are central to that strategy, especially as they push hard outside of Mainland China. The structure relies on strategic acquisitions and a network of external producers and distributors.

The most significant recent move was the equity investment in a leading compliant European e-vapor company, which was finalized in March 2025 and consolidated into the financial statements starting in June 2025. This move was key for expanding operational footprint and gaining local market share in Europe. Furthermore, RLX Technology completed a Merger/Acquisition with Totally Wicked Group on May 31, 2025. The impact of these international consolidations and organic growth was clear in the third quarter of 2025 (Q3 2025), where net revenues from the international business represented 71.6% of the total net revenues. This favorable shift in geographic revenue mix, alongside the European consolidation, helped push the gross margin up to 31.2% in Q3 2025, compared to 27.2% in Q3 2024.

The company maintains a reliance on external production capabilities to support this global scale.

• Manufacturing and supply chain partners for e-liquid and hardware production: RLX Technology engages multiple third-party manufacturing partners to produce products overseas, adhering to the company's specifications and quality standards.

For market penetration, especially in Asia, RLX Technology uses a direct-to-retailer approach bolstered by partnership structures.

• Network of franchise retail partners in East Asian markets: RLX Technology introduced a franchise model in select Asian markets, converting certain vape stores into branded holders to gather first-hand marketing insights and enhance the route-to-market strategy.
• Key accounts like convenience stores and petrol stations in international markets: The company extended its leadership in key Asia Pacific and European markets through targeted investments in retail networks and tailored local product platforms.

Here's a quick look at how the international expansion, heavily reliant on these partnerships and acquisitions, translated into Q3 2025 financial performance:

The company's total financial assets, which provide flexibility for these strategic investments, stood at RMB 15,351.1 million (US$2,156.4 million) as of September 30, 2025. Finance: draft next quarter's capital allocation plan focusing on European integration by end of January 2026.

RLX Technology Inc. (RLX) - Canvas Business Model: Key Activities

You're looking at the core engine driving RLX Technology Inc.'s performance in late 2025. The key activities are heavily weighted toward global scaling and product innovation to outmaneuver regulatory shifts. Honestly, the numbers show a clear pivot.

International Market Expansion and Penetration Strategy

The primary activity is executing the globalization strategy, which has clearly paid off in revenue contribution. This involves targeted investments in retail networks and developing local product platforms for specific regions.

• Net revenues from international business represented 71.6% of total net revenues for the third quarter of 2025.
• International markets contributed between 70-80% of total revenues in Q3 2025.
• The Q3 2025 revenue increase was mainly driven by equity investment in European markets and organic growth internationally.
• The company highlighted the successful rollout of its proprietary modern-oral product line in the United Kingdom.

Research and Development (R&D) for New Product Categories like Modern Oral

RLX Technology Inc. dedicates significant resources to R&D, which is essential for developing products that align with evolving global regulations, such as the move into modern oral nicotine products. This activity validates years of investment in technology.

Here's a quick look at the R&D spend across the first three quarters of 2025:

The Q3 2025 R&D expense of RMB 41.3 million (US$5.8 million) shows an acceleration in investment compared to the prior quarters of 2025.

Navigating and Ensuring Compliance with Complex Global E-Vapor Regulations

Adapting to regulatory changes is a non-negotiable key activity. This involves both proactive product redesign and leveraging market stabilization efforts in core regions.

• In Q2 2025, the company launched the "Big Puff" rechargeable vapes specifically to comply with UK/NZ disposable bans.
• Management noted that enhanced customs enforcement in Mainland China helped restore order to the market for compliant players.
• The company emphasizes prioritizing global compliance in its strategy execution.

Efficient Working Capital Management with a Negative Cash Conversion Cycle

While the specific negative cash conversion cycle figure isn't in the latest reports, the strong cash generation activity demonstrates highly efficient working capital management. The balance sheet remains robust, supporting operations and shareholder returns.

Net cash generated from operating activities in the third quarter of 2025 was RMB 357.5 million (US$50.2 million). As of September 30, 2025, the Company held cash and cash equivalents, net, totaling RMB 15,351.1 million (US$2,156.4 million).

RLX Technology Inc. (RLX) - Canvas Business Model: Key Resources

You're looking at the core assets RLX Technology Inc. relies on to run its business as of late 2025. These aren't just line items; they're the foundations of their market position.

Financial Strength and Liquidity

The company maintains a significant pool of readily available capital, which is crucial for navigating regulatory shifts and funding international growth. As of March 31, 2025, RLX Technology reported its combined financial assets-cash and cash equivalents, restricted cash, short-term bank deposits, net, short-term investments, net, long-term bank deposits, net and long-term investment securities, net-totaled RMB16,159.6 million, equivalent to approximately US$2,226.9 million. This aligns closely with the expected strong liquidity position you mentioned. For context on recent cash flow, net cash generated from operating activities in the first quarter of 2025 was RMB207 million.

Here's a quick look at the recent liquidity snapshot:

If onboarding new international distribution partners takes longer than expected, this cash buffer helps cover the lag. What this estimate hides is the exact split between highly liquid cash versus longer-term, though still liquid, investment securities.

Technology and Intellectual Property

A core resource is the firm's proprietary closed-system e-vapor technology and the associated design patents. This R&D focus supports product differentiation. For instance, Research and development expenses in the fourth quarter of 2024 were RMB32.4 million (US$4.4 million). The company is actively investing in its technology base, which underpins its product pipeline.

The key technology assets include:

• Proprietary closed-system e-vapor technology.
• Design patents protecting hardware and pod systems.
• A multi-layered development framework.

Manufacturing and Operations Base

RLX Technology Inc. operates an established e-liquid manufacturing facility located in Shenzhen, China. This physical asset is vital for controlling the supply chain for its core consumables. The company's operational base in Shenzhen is central to its manufacturing and quality control processes.

Brand Equity and Market Presence

The RELX brand name itself represents significant equity, built on its historical market leadership in core regions. This brand recognition helps drive adoption, especially in newly entered international territories. The success of this brand is reflected in revenue distribution; for the third quarter of 2025, net revenues from the international business represented 71.6% of total net revenues. This indicates a strong, revenue-generating international footprint built upon the brand.

Key indicators of brand strength include:

• Market leadership in core Asia Pacific markets.
• Successful rollout of new product lines in regions like the United Kingdom.
• High percentage of revenue derived from international sales.

Finance: draft 13-week cash view by Friday.

RLX Technology Inc. (RLX) - Canvas Business Model: Value Propositions

You're looking at how RLX Technology Inc. delivers distinct value to its customers in late 2025. The core is built around offering products that meet strict quality and compliance standards while staying ahead of the regulatory curve globally.

Compliant, high-quality e-vapor products for adult smokers is a major pillar. The financial results definitely reflect this focus on quality and international market acceptance. For instance, the gross margin hit 31.2% in the third quarter of 2025, a solid jump from 27.2% in the same period of 2024. This margin improvement suggests favorable revenue mix and better pricing power, which often backs up a premium, compliant offering. Net revenues for Q3 2025 reached RMB1,129.3 million (US$158.6 million), showing strong top-line growth driven by international success and a measured recovery in Mainland China due to better customs enforcement against illegal products.

Here's a quick look at how the financial performance supports the value proposition of quality and growth:

Product innovation is clearly a driver, especially with the shift in international markets. RLX Technology Inc. is proud of the successful rollout of its proprietary modern-oral product line in the United Kingdom, which reflects years of R&D investment to capture new user segments. This is backed by R&D spending in Q3 2025 of RMB41.3 million (US$5.8 million).

Rapid adaptation to regulatory changes is a necessity, not a choice, in this industry. You see this clearly in the UK, where distributors responded proactively to the announced disposal ban even before it was fully enforced. The value proposition here is navigating complexity for the user. We observed a gradual shift as users of small puff disposables migrated to alternatives, mostly 'Big Puff' devices, and the company expects this conversion to be largely completed by the end of 2025.

The consistent product experience via a closed-system design is another key value point. The company is advancing cartridge-based technology across both closed system and open system products. This focus on system consistency seems to resonate with existing users in the domestic compliance segment, as cartridge pods showed faster growth than devices, indicating growing retention among users adopting compliance products.

You can see the product focus in the following areas:

• Advancing cartridge-based technology in both closed system and open system products.
• Optimizing e-liquid and cartridge integration for superior performance.
• Successful rollout of proprietary modern-oral products in the United Kingdom.
• Domestic compliance segment shows cartridge pods growing faster than devices.

Finance: draft 13-week cash view by Friday.

RLX Technology Inc. (RLX) - Canvas Business Model: Customer Relationships

You're looking at how RLX Technology Inc. keeps its customers engaged, especially as the regulatory landscape keeps shifting. The core of their approach involves a multi-pronged strategy balancing local execution with global expansion, all while managing the transition for their domestic user base.

Franchise retail model focusing on local execution and consumer loyalty

The franchise model is a key lever, particularly outside of Mainland China, to build deep local connections. For instance, in select Asian markets as of the first quarter of 2025, RLX Technology introduced a franchise model for exclusive stores. This involved converting existing vape stores into branded holders. The goal here is direct, first-hand marketing insights and a sharper route-to-market strategy. They are also actively building local teams to gather detailed retail data, which helps them serve both the retailers and the end consumers better. This focus on local execution supports consumer loyalty by tailoring the experience.

The company's strong financial performance in Q3 2025, with net revenues reaching RMB1,129.3 million (US$158.6 million), shows this strategy is driving growth, with international business being a major component. The gross margin improved to 31.2% in Q3 2025, suggesting better control over the cost of serving these diverse markets.

Here's a snapshot of the scale of their offline network, though the most recent data is from 2020:

Direct engagement through branded stores in Mainland China (Branded store plus model)

In Mainland China, the engagement centers around the integrated offline distribution and 'Branded store plus' retail model. This model is specifically tailored to the domestic e-vapor market structure. While the exact number of branded stores as of late 2025 isn't public, the strategy remains centered on these physical touchpoints for direct consumer interaction and brand reinforcement under the new regulatory framework.

The regulatory environment in Mainland China has been stable since the 2022 management measures and national standards rollout. This stability has allowed for a measured recovery, as indicated by the contribution of the Mainland China business to the Q3 2025 revenue growth. The company also launched a line of disposable products in Mainland China that received positive market feedback in Q1 2025, showing product innovation directly tied to local consumer acceptance.

The shift in revenue contribution highlights where customer focus is currently directed:

• Net revenues from international business represented 71.6% of total net revenues for Q3 2025.
• The remaining portion reflects the ongoing, albeit recovering, engagement within the Mainland China market.

Customer migration strategies to ensure retention post-regulatory changes

Regulatory shifts globally, including bans on disposable products and excise taxes, force customer migration. RLX Technology Inc. is responding by emphasizing product innovation that aligns with new user demands. Globally, there's a noted trend toward larger-volume e-liquid products, which users are seeking for convenience and cost-effectiveness. The company is positioning itself to meet this demand through R&D investments.

Retention is also supported by a commitment to compliance, which builds trust with the remaining compliant retail partners and adult smokers. For example, in Q3 2025, the company highlighted the successful rollout of its proprietary modern-oral product line in the United Kingdom, which is a direct result of R&D investments aimed at unlocking development opportunities among new user segments. This is how they manage migration-by offering compliant, appealing alternatives.

The company's overall financial health supports these long-term relationship investments:

• As of September 30, 2025, total financial assets stood at RMB15,351.1 million (US$2,156.4 million).
• Net cash generated from operating activities in Q3 2025 was RMB357.5 million (US$50.2 million).

They are reinforcing their commitment to long-term value creation, which includes returning capital to shareholders, a signal of confidence that underpins brand stability. To date, including the cash dividend announced in Q3 2025, they have returned over US$500 million to shareholders through repurchases and dividends. Finance: draft 13-week cash view by Friday.

RLX Technology Inc. (RLX) - Canvas Business Model: Channels

You're looking at how RLX Technology Inc. gets its products into the hands of adult smokers across the globe as of late 2025. The channel strategy is clearly bifurcated now, leaning heavily toward international markets, which is a major shift.

For offline distribution and wholesalers globally, RLX Technology Inc. uses its offshore entity to manage sales into overseas markets. Domestically, while the structure has evolved due to regulation, the historical foundation involved partnering with 110 authorized distributors to reach a vast network. As a point of reference from the past, this network previously covered over 5,000 RELX Branded Partner Stores and more than 100,000 other retail outlets across over 250 cities in China.

Regarding branded retail stores and authorized franchise outlets in China, compliance is the name of the game now. As of July 31, 2025, the offline stores operated by RLX Technology Inc. in China have successfully obtained the Tobacco Monopoly Licenses for Retail Business. This licensing is critical for maintaining their physical footprint within the Mainland China market, which is seeing a measured recovery.

The international distribution networks are definitely the growth engine. This expansion is significantly bolstered by the European equity investment, which is translating directly to the top line. For the third quarter ended September 30, 2025, net revenues from international business represented a commanding 71.6% of the total net revenues. This growth was explicitly driven by these European market investments and organic expansion. A concrete example of this international push is the successful rollout of their proprietary modern-oral product line in the United Kingdom during Q3 2025. Furthermore, the company executed a strategic acquisition in this channel space, completing a Merger/Acquisition with the Totally Wicked Group in the UK on May 31, 2025.

When we look at key account sales to convenience stores and petrol stations, the focus is on compliance-driven partnerships. Commentary from Q2 2025 indicated that reputable retail channels, especially these key accounts, are actively steering away from gray market products. They are prioritizing partnerships with compliant businesses that hold a leading market share, which opens up significant growth opportunities for RLX Technology Inc.

Here's a quick look at the channel performance reflected in the latest financials:

The shift in revenue mix by geography is directly impacting margin improvement, which hit 31.2% in Q3 2025, up from 27.2% in Q3 2024.

You can see the channel strategy is now heavily weighted toward formal, compliant international routes, especially in Europe, supported by direct investment and acquisition activity.

RLX Technology Inc. (RLX) - Canvas Business Model: Customer Segments

You're looking at the core groups RLX Technology Inc. serves as of late 2025. The focus has clearly shifted globally, but the domestic base remains a factor in their strategy.

The primary target remains adult smokers globally seeking harm-reduction alternatives. This encompasses users across their various product categories, including e-vapor, heat-not-burn, and modern oral nicotine products, which are seen as complementary segments addressing distinct consumer needs, with most consumers entering the smokeless market by moving away from traditional cigarettes.

The geographic split of the customer base is now heavily weighted internationally, a key strategic pivot for RLX Technology Inc.

The international expansion is the engine right now, driven by specific regions and strategic moves. The growth story is defintely international.

• Consumers in Asia-Pacific markets, fueled by successful product innovation and a franchise retail model engaging over 450 partners in one East Asian country.
• Consumers in European markets, significantly boosted by the full three-month financial consolidation of an acquired European e-vapor company in Q3 2025.
• UK consumers, targeted by the successful rollout of a proprietary modern-oral product line.

Domestic Chinese adult smokers of regulated, tobacco-flavored products still contribute, though their revenue share is smaller compared to the international business. The company notes a gradual recovery in Mainland China business, aided by enhanced customs enforcement restoring market order for compliant players.

RLX Technology Inc. (RLX) - Canvas Business Model: Cost Structure

You're looking at the hard numbers that drive RLX Technology Inc.'s operations as of late 2025. The cost structure is heavily influenced by the shift toward international sales, which represented 71.6% of net revenues in Q3 2025, alongside necessary investment in compliance and innovation.

The primary cost driver, as expected for a manufacturer, is the Cost of Revenue (COGS). For the third quarter of 2025, net revenues hit RMB1,129.3 million (US$158.6 million). With a reported Gross Margin of 31.2% for the same period, this implies a Cost of Revenue of approximately RMB776.7 million (RMB1,129.3 million revenue minus RMB352.6 million gross profit). The improvement in gross margin, up from 27.2% year-over-year, suggests that manufacturing and supply chain efficiency gains are taking hold, partly due to the consolidation of an equity investment in European markets.

Research and development (R&D) is a clear area of dedicated spending, reflecting the commitment to product innovation for global segments. For Q3 2025, RLX Technology Inc. reported RMB41.3 million (US$5.8 million) in Research and development expenses. This was a significant increase from RMB24.4 million in the third quarter of 2024, driven by higher share-based compensation and personnel costs.

Sales, General, and Administrative (SG&A) expenses are the second largest component of operating costs, reflecting the push for global expansion and brand building. You have to look at the two main parts here:

• Selling expenses were RMB132.3 million (US$18.6 million) in Q3 2025.
• General and administrative expenses were RMB85.7 million (US$12.0 million) in Q3 2025.

The total Operating Expenses for the quarter were RMB259.3 million (US$36.4 million). The increase in selling expenses, up from RMB69.0 million year-over-year, is tied to higher salaries, shipping costs, and share-based compensation, all necessary to support the international growth strategy.

Regulatory compliance and excise tax costs are embedded within the operating expenses and COGS, though RLX Technology Inc. doesn't break out a specific line item for this in the Q3 2025 summary. However, the context of the business shows these costs are material. The company is adapting to regulatory changes, such as the UK disposable e-vapor product ban, and navigating the competitive environment in Mainland China amid enhanced customs enforcement. These efforts require ongoing investment in legal, compliance, and market-specific operational adjustments.

Here's a quick look at the key cost and expense components for Q3 2025:

Finance: draft 13-week cash view by Friday.

RLX Technology Inc. (RLX) - Canvas Business Model: Revenue Streams

You're looking at how RLX Technology Inc. actually brings in the money, and as of late 2025, it's all about the hardware and the juice that powers it. The core of the revenue stream is, quite simply, the sales of e-vapor devices and consumable pods/e-liquids. This is the bread and butter of a leading global branded e-vapor company, focusing on getting their proprietary systems and refills into the hands of consumers, both through their established channels and expanding international networks. It's a razor-and-blades model, where the device is the entry point and the recurring revenue comes from the consumables.

Here's a quick look at the top-line performance for the third quarter of 2025, which really shows the momentum they've built:

The story behind that revenue growth, which was a 49.3% year-over-year increase from RMB756.3 million in Q3 2024, is heavily skewed toward their global push. Honestly, the domestic China market is still there, but the international play is what's driving the big numbers now.

The geographical split of revenue clearly shows where the focus is right now:

• Revenue primarily driven by international markets, representing 71.6% of net revenues for the period.
• International growth is fueled by expansion in key Asia Pacific and European markets, including the consolidation of a European e-vapor company.
• The Mainland China business is seeing a measured recovery amid enhanced customs enforcement.

To be fair, this growth isn't just on paper; the company is converting sales into usable cash. For the third quarter of 2025, the net cash generated from operating activities was a solid RMB357.5 million (or US$50.2 million). That cash flow helps fund their ongoing international expansion and shareholder returns, like the recently declared dividend.