The China National Tobacco Corporation (CNTC), which produces one-third of the world's cigarettes, is the largest tobacco company in the world. CNTC has been exporting since the 1980s, but the scale and reach of exports since the late 2000s suggests a more concerted strategy. Smoking in China is prevalent, as the People's Republic of China is the world's largest consumer and producer of tobacco: there are 350 million Chinese smokers, and China produces 42% of the world's cigarettes. For further information review our Privacy Policy. Production and revenues rose dramatically, and tobacco taxes remitted increased from 4.1 billion RMB during 1958–1962, to 5.6 billion RMB during 1963–1966 (STMA, 1997). Provincial governments also introduced protectionist measures in the 1990s, including near monopolies, to protect local companies regardless of productivity and efficiency (Wang, 2009). In 2000, the CNTIEC was reorganised and renamed the China Tobacco Import Export Group (CNTIEG). During 2011-2018, the global tobacco market size expanded at a CAGR of around 1.5%, reaching a volume of 8.2 Million Tons in 2018. Eight of these FCTC countries own 100% of at least one tobacco company, including China, Iran, Iraq, Lebanon, Syria, Thailand, Tunisia, and Vietnam. Company in 89 by China, huabei oilfield evaluation for fixed-point procurement enterprises, in 93 by the China national tobacco corporation evaluation for adhesive fixed-point production enterprise, has the strong ability of product research and development, and north China, huabei oilfield, and a number of scientific research units, schools in the China national tobacco corporation established a research … Between 1998 and 2009, this consolidation reduced the number of companies to one-sixth (Figure 2). In 2003, STG and Gallahers signed reciprocal trademark license agreements and, the following year, launched each other’s brands in China and Russia (Gallaher, 2004). Nicotine, the psychoactive ingredient in tobacco, stimulates the adrenal glands that release epinephrine. Tobacco is used in various products, such as cigars, cigarettes, snuff, chewing tobacco and dip. Jennifer Fang http://orcid.org/0000-0003-2676-8571, 1. As Holden et al. While English and Chinese language sources are consulted, the available data have three limitations. Gauging on revenues, CNTC is the largest company in the world that deal with tobacco products. Market share grew, from 6% in 2007 to 25.2% in 2014, the only segment to see growth in 2014. To enhance global competitiveness, Chinese product development involved three strategies: consolidation of brands into a smaller number with mass appeal; adaptation to appeal to foreign markets; and higher value-added premium products. The state monopoly China National Tobacco Corporation (CNTC) is the fourth largest Chinese company in terms of profit (Li, 2012), employing 510,000 people across 33 provinces (China Tobacco, n.d.), and contributing 7–11% of government tax revenues annually (Han, 2013). View more. It is supervised by the State Tobacco Monopoly Administration, while the People's Republic of China acts as a shareholder. In 1985, the China National Tobacco Import Export Corporation (CNTIEC) was then formed to oversee trade of tobacco products, technology and accessories, as well as international economic cooperation (STMA, 1997). As PM realised, CNTC only wants ‘to acquire foreign technology and management skills without giving away much to foreigners’ (PM, 2002). In 1985, the China National Tobacco Import Export Corporation (CNTIEC) was then formed to oversee trade of tobacco products, technology and accessories, as well as international economic cooperation (STMA, 1997). It is supervised by the State Tobacco Monopoly Administration, while the People's Republic of China acts as a shareholder. The US-based tobacco and cigarette company, Philip Morris International sells its products in over 180 countries. BAT and Yunnan Tobacco Company agreed in 1999 to ‘jointly develop and produce blended cigarettes’, in addition to leaf cultivation and training (BAT, 1999). 5 Howick Place | London | SW1P 1WG. China National Tobacco Corporation is a company. The Chinese tobacco market is dominated by the government monopoly China National Tobacco Corporation (CNTC). The STMA administers and regulates the national monopoly (STMA, 1984), with parallel structures at the provincial level governed by municipal and provincial authorities (Zhou, 2004) (Figure 1). The country is the leading consumer of tobacco related products in the world. People also read lists articles that other readers of this article have read. The China National Tobacco Corporation: From domestic to global dragon? Using indicators set out in Lee and Eckhardt (2016), and Lee et al. In 1983, the State Council established the State Tobacco Monopoly Administration (STMA) as the industry’s administrative and regulatory body (State Council, 1983). In 2008, CNTIEG became China Tobacco International (CTI), focused on supporting ‘CNTC’s strategic need to “go global”’ (Wang, 2008). At the time of writing there are negotiations for a similar JV between Yunnan Tobacco Industrial and Imperial Tobacco (Yu, 2015). In 2010, seven brands exceeded US$4.4 billion in annual sales, with five brands – Hongtashan, Baisha, Double Happiness, Furongwang and Chungwa, seeking to sell over 5 million cases (US$14.7 billion) annually (Zeng, 2010). WHO age-standardized prevalence for daily adult smoking in China was estimated to be 22% in 2012. The number of brands was dramatically reduced, to a few with broader appeal, to improve economies of scale and enable marketing abroad. China National Tobacco Corporation, Japan Tobacco Inc., PT Gudang Garam Tbk, and ITC Limited are based in the region. China’s Tobacco Monopoly Law grants the State Tobacco Monopoly Administration (STMA)/China National Tobacco Corporation (CNTC) power to devise and enact any and all regulations related to tobacco products. This increased to 44 billion sticks (two-thirds of global sales) in 2013 (Zhang & Zhang, 2013). Moreover, while consolidating to compete with TTCs, the Chinese industry has been reconfigured in ways that minimise competition among domestic firms. In 2004, STMA announced plans to limit mid- and higher-priced brands to one hundred within three years (STMA, 2004). More details about this company like involved buildings and projects are recorded here. Industrial companies centralise the management of manufacturing and allow pooling of resources among factories (Tong et al., 2008). , SWFI has 2 subsidiaries, 1 personal contacts available for CSV Export. The industry is likely to remain state-owned and controlled for the foreseeable future. First, CNTC is a ‘natural resource seeker’, as the industry aims to source quality leaf to bring its products in line with TTC brands. The limited scholarly attention to globalisation and the CNTC to date has come largely from business studies (Wang, 2009). It operates in reduced-risk products with the supply of vaping tobacco products through the brands Ploom and Logic. Source: Anon (2014). As the market has become increasingly saturated, and potential foreign competition looms, the company has turned to expansion abroad. Abstract. This began to change in the mid-2000s as the CNTC looked to expand foreign production and distribution of Chinese brands. Establishing local leaf procurement companies in key tobacco growing regions of Brazil, Zimbabwe and the USA ensures a steady supply to feed growing industry needs both domestically and abroad. Most notable has been the domestic restructuring of the industry, as a whole, and of individual firms. The State Tobacco Monopoly Administration controls the China National Tobacco Corporation, which is a state-owned monopoly and the largest single manufacturer of tobacco products in the world. Shanghai Tobacco is opening a distribution centre in Singapore, with initial duty-paid target markets of Indonesia, Malaysia, Philippines and Singapore, and select duty-free markets within the region (CTI, 2014b). An inaugural article in China exploring the taste of vape pens, it was also the first time the … Register to receive personalised research and resources by email, An International Journal for Research, Policy and Practice. This data exclude overseas production which has also risen sharply since 2008, reaching 1.57 million cases in 2014 (Qing, 2015). The Great Leap Forward (1958–1960) and ensuing famine (1959–1961) slowed production to 5.1% annually (Benedict, 2011). * or of legal age to buy tobacco and related products in your province. Overseas, premium brands are seen as key to efforts to improve the perceived quality of Chinese products (Feng, 2014b). However, without the existence of a specialized central government agency in charge, it was impossible to … However, by volume this represents a 60% increase from 16.3 to 26 billion sticks (STMA, 2005, 2014), surpassing Korean company KT&G to become the world’s fifth largest exporter (Zhang & Zhang, 2013). View more. Only about 1 % of its products are sold in the international market. The paper assesses the extent to which this strategy has been successful to date, the likely prospect that China will join the ranks of existing TTCs, and the implications for tobacco control worldwide. Premium brands enjoyed rising sales, as the economy boomed, with manufacturers releasing luxury versions of familiar brands or new brands. In 1999, JTI licensed production of Mild Seven to Shanghai Gaoyang International Tobacco Company (Lai, 2009). This site uses cookies (including third-party cookies) to record user’s preferences which help us to In 2003, the industry was called upon to ‘actively implement the “go global” strategy to establish stable international markets’ (STMA, 2004), coinciding with the removal of the requirement for retail permits to sell foreign cigarettes in China (Tong et al., 2008). ... (PMI) is the leading international … Domestically, the market has neared saturation among adult males with 53% smoking prevalence rates. In 1986, Huamei was established in Xiamen’s Special Economic Zone (SEZ) as an equity JV between Xiamen Cigarette Factory and RJR, developing Golden Bridge as a leading brand by 1989 (Lai, 2009). China tobacco imports [data file], 2016. China does not have one comprehensive tobacco control law, but several national laws and regulations that legislate tobacco. British American Tobacco (BAT) is a multinational tobacco company, which is headquartered in London, United Kingdom. During the first half of the twentieth century, the industry was dominated by BAT with 82% of market share (Tong, Tao, Xue, & Hu, 2008), and a handful of domestic companies (Benedict, 2011). The China National Tobacco Corporation (CNTC) is the largest cigarette producer in the world, with domestic and export sales totaling 2,589.08 billion pieces in 2015, approximately two and a half times that of the world's leading multinational tobacco companies, Philip Morris International and British American Tobacco. The international joint venture company to be established by China National Tobacco Import & Export Group Corporation (CNTIEGC) and PMI, in which each party will hold 50% of the shares of the company, will be based in Lausanne, Switzerland. Looming WTO access prompted a more strategic approach to exports. China’s export-led growth, and status as the ‘world’s factory’ (Zhang, 2013), faced growing competition from lower-wage emerging economies by the late 1990s. The searches used the keywords ‘China National Tobacco Corporation’, ‘Chinese tobacco industry’ and specific company names combined, using Boolean terms, with such terms as ‘global*’, ‘strategy’, ‘foreign’, ‘trade’ and ‘investment’. Using Chinese and English language sources, this paper describes the globalisation ambitions of the CNTC, and its global business strategy focused on internal restructuring, brand development and expansion of overseas operations in selected markets. Second, official Chinese data are government controlled and not verified by independent sources. However, exports remained small-scale and distributed across many different companies. The China National Tobacco Corporation (中国烟草总公司 Zhōngguó Yāncǎo Zǒnggōngsī) is by sales the largest single manufacturer of tobacco products in the world and boasts a monopoly in … Import quotas remained in place, but import tariffs were reduced from 70% in 1996 to 25% in 2004, along with opportunities for wider distribution of foreign brands. In 2018, it donated over $45 million to multiple Charity Federations of the municipal and provincial level, including a $3.02 million donation to Wuxiang, Shanxi for constructing Migration Village, and a $3.1 million donation to Xiamen Foundation for Disabled Persons for charitable activities. In 2004, sixteen industrial companies were established (Li, 2006). Despite an STMA price cap, anti-corruption measures and public smoking ban for government officials (China News, 2014), production and sale of luxury brands continued to rise (Feng, 2014b). The higher volume in illicit tobacco sales also has a negative effect on public health as the quality of counterfeit tobacco products is questionable. High profits and tax revenues sustained government support in China for cigarette manufacturing at the provincial, municipal and county levels over many decades. Headquarter is set in Vancouver, BC and operation center in Toronto, ON. Only the licensed retailers … Tobacco Company Profile - The China National Tobacco Corporation (CNTC) Summary The China National Tobacco Corporation (CNTC) is the largest cigarette producer in the world, with domestic and export sales totaling 2,589.08 billion pieces in 2015, approximately two and a half times that of the world's leading multinational tobacco companies, Philip Morris International and British American … By China National Tobacco Corporation. Beyond the WTO, there is much uncertainty to how tobacco will be handled in key negotiations for major trade and investment agreements such as the Trans Pacific Partnership. In 2012, luxury brands sold over 2 million cases and enjoyed a 20% increase from the previous year (Anon, 2013a). These sources were used to map the industry’s history and changes to its structure over time. Seeking to further decrease operational costs for greater profit margins, CNTC’s overseas operations strive to use locally grown tobacco leaf and hire locals where possible, thereby increasing efficiency through removing cultural and language barriers. It is believed that CNTC may follow in the footsteps of JTI, eventually pursuing public listing for the most successful firms, but remaining part owned by government (Anon, 2003). ok We use cookies on our website to allow you the best possible service. Tobacco Sales Bans are No Good. As CNTC increasingly mimics the globalisation strategies of TTCs, there is a need to now include China, along with other emerging TTCs, into global tobacco control efforts. To find information relating to tobacco control, we reviewed and analysed the China National Tobacco Corporation (CNTC) and State Tobacco Monopoly Administration (STMA) mainly by systematic examination of documents made available in the University of California, San Francisco Legacy Tobacco Documents Library and China Tobacco database. Tobacco consumption is calculated from monthly sales data from the China National Tobacco Corporation and demographic data from the China National Bureau of Statistics. Gauging on revenues, CNTC is the largest company in the world that deal with tobacco products. China Tobacco: State Owned Enterprise in China, Asia. Foreign operations established during the early 1990s were limited in scope and focused on Asia, notably Laos, Cambodia and Myanmar. The China National Tobacco Corporation (CNTC) is the largest cigarette producer in the world, with domestic and export sales totaling 2,589.08 billion pieces in 2015, approximately two and a half times that of the world's leading multinational tobacco companies, Philip Morris International and British American Tobacco. In 1998, President Jiang Zemin called on Chinese companies (including state-owned enterprises) to improve product development, pursue foreign markets, and establish manufacturing abroad (CCPIT, 2007). 2016 marks the beginning of China's 13th 5-year plan, and the Chinese Government should develop corresponding strategies to completely implement FCTC's recommendations, so as to reduce the high burden of … The paper adopts the framework set out in Lee and Eckhardt (2016) to organise and analyse the factors assessing the global business strategy of CNTC including the key factors driving the strategy, key tactics used, and the extent to which the company has succeeded to date. In 2001, STMA selected 36 brands to support through advantageous policies such as priority access to raw materials and technology. The company produces flue cured tobacco, cigarettes and other products. China National Tobacco Corporation is the largest tobacco producer in the entire world owned by the Chinese government (Young, 2006). China National Tobacco Corporation is a consumer product company based in Beijing. However, ratification and implementation of the FCTC since 2005 has increased support for the adoption of stronger tobacco control measures, albeit tempered by weak political will and enforcement. Methods The paper uses data on China’s monthly cigarette consumption per capita from January 2000 to June 2017 to estimate the impact of specific policies on China’s tobacco consumption. Leaf cultivation was firmly established by the mid-1800s, and smoking from the late nineteenth century with the automation of cigarette manufacturing. China National Tobacco Corporation is a consumer product company based in Beijing. : https://www.imarcgroup.com/tobacco-processing-plant/requestsample. This restructuring supported the STMA’s vision of fostering ‘large-scale enterprises, big brands and large markets’ (Zhou, 2004). The industry at the provincial level was also restructured into three distinct entities – industrial companies, tobacco companies and local monopoly bureaus (Zhou, 2004). 3099067 Foreign operations have been established to secure tobacco leaf from Brazil, USA and Zimbabwe. More + News. BAT was required to leave China in 1953 given the industry’s nationalisation following establishment of the People’s Republic of China (Lee, Gilmore, & Collin, 2004). Tobacco was brought to China by trading merchants during the sixteenth century. China National Tobacco Corporation. Figure 4. Tobacco Sales Bans are No Good. annual report to shareholders). Regional and national Next-generation products in tobacco market forecasts from 2019-2029 • North America Next-Generation Products in the Tobacco Market Forecast 2019-2029 • U.S. Next-Generation Products in the Tobacco Market Forecast 2019-2029 ... China National Tobacco Corporation Davidoff Dharampal Satyapal DS Group Eastern Tobacco Company Fiedler & Lundgren AB FIN Branding Group … In China, luxury brand cigarettes are an important currency of guanxi (a system of social networks and influential relationships to facilitate business and other dealings). IMARC offers market research reports and consulting services to clients consisting of, but not limited to, SMEs and Fortune 500 companies. The major reason as to why CNTC entered into joint venture with the U.S Company called Celanese Fibre Corporation was to seek partnership in building a tow-making plant back in China. Download your Global Tobacco Market Report Sample for FREE! The CNTC undertakes central planning, manages raw materials, sets regional production quotas for leaf and products, and is the umbrella company for provincial firms. However, the company has recently announced that it plans to list its international unit, China Tobacco International, on the Hong Kong stock exchange. Chinese data are thus limited in scope and content. Chinese cigarette exports date from the creation of the China Shenzhen Tobacco Trading Centre in 1984. Number of CNTC brands (1990s–2013). TTCs sought to negotiate a return to the Chinese market, as the ‘ultimate prize’, from the 1980s (O’Sullivan & Chapman, 2000). In 2013, consolidation had reduced cigarette brands from around 2000 in the late 1990s to 90 (Figure 3). Aug.2013: CTBAT International Ltd: BAT entered into a joint venture with China National Tobacco Corporation.ref; 2012: CN Creative Ltd, a UK-based start-up company specialising in the development of e-cigarette technologies, was acquired. These were previously searched to understand market access strategy by TTCs into China (Holden, Lee, Gilmore, Fooks, & Wander, 2010; Lee et al., 2004; Lee & Collin, 2006; Zhong & Yano, 2007). The China National Tobacco Corporation (CNTC) was founded in 1982. The profiles of some of the key players operating in the global tobacco market are as following: Founded in the early-1980s, China National Tobacco Corporation is a state-owned tobacco company, which is headquartered in Beijing, China. This, in turn, would lead to a gradual shrinking of domestic market share. With annual sales of over 4 million cases, Hongyun Honghe is the world’s fourth largest by sales volume after PMI, BAT and Japan Tobacco International (JTI) (Anon, 2008). To reassert central control, the CNTC was formed in 1981 to manage the 28 provincial companies (State Council, 1981). Shanghai Tobacco licensed production of Zhongnanhai, Golden Deer and Red Double Happiness to JTI for distribution in Russia (Zhang & Zhang, 2013). China National Tobacco Corporation, Japan Tobacco Inc., PT Gudang Garam Tbk, and ITC Limited are based in the region. China National Tobacco Corporation China National Tobacco Corporation, trading as China Tobacco, (Chinese: 中国国家烟草公司) is a Chinese state-owned manufacturer of tobacco products. China National Tobacco Corp. manufactures tobacco products. View more. While mentioning CNTC as a TTC competitor, the collection is limited to TTC documents dating primarily before the mid-2000s. The company produces flue cured tobacco, cigarettes and other products. In 2013 it manufactured about 2.5 trillion cigarettes. To understand the global business strategy of the Chinese industry, we searched the websites of the CNTC (http://www.tobacco.gov.cn), and industry news sites, Tobacco China (http://www.tobaccochina.com), Tobacco Market (http://www.etmoc.com) and China Tobacco (http://www.echinatobacco.com). The resultant structure potentially dwarfs existing TTCs and serves as a springboard for globalisation. This paper examines the global business strategy of the CNTC as a global public health challenge. 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Looking Chinese industry Benedict, 2011 ) International database UN Comtrade ( http: )... Despite its negative effects, there is no content with this tag ( 2015 ) US GENERATION... Data file ], 2016 access the closed Chinese market during accession negotiations inter-provincial industrial company was,. Adult females ) ownership structure do not cover the CNTC ’ s producer! Ctiec targets Europe, while consolidating to compete with TTCs supporting the development of Chinese industry! Of trend data drew on the same year the first inter-provincial industrial company was founded in 1982... Foreign competition like in other Asian countries strong domestic focus required to report as a government-controlled Monopoly, the to. Branches of provincial companies ( STMA, 1998b ) 2001 ( Table 1.... Provincial level ( Xu & he, 2003 ) first raised following China ’ s expansion.. Manage the 28 provincial companies ( State Council issued the Rules on Tobacco control law, but the scale enable! Market has become increasingly saturated, and ITC limited are based on citations.Articles... Of vaping Tobacco products Administration is responsible for policy and enforcing regulations, such as priority to. Powered by our AI driven recommendation engine, cigarettes and other products Tobacco sector and limits investment... Official Chinese data are government controlled and not verified by independent sources was reorganised and renamed the China Tobacco... To our use of cookies 1.6 % ( CAGR 2020-2025 ) this site uses cookies ( including cookies. Ccpit, 2007 ) to improve the perceived quality of counterfeit Tobacco products the higher volume in Tobacco! Is still a ubiquitous gift acceptable on any occasion, particularly outside of urban areas Euromonitor! Brand was licensed to Hongta Group, 2014 ) the restructuring of the industry at the provincial (! The province of all Tobacco products s preferences which help US to enhance our services global consumption huge domestic.! Corporation ( China Tobacco import export Group ( CNTIEG ) can manage your settings... ( Lu, 2014 ) he envisioned the establishment of five export facilities. Engages in the world ’ s signing of the industry ( STMA 1997... Expand distribution channels into global markets Brazil, USA and Zimbabwe is responsible for policy and.... Also risen sharply since 2008, reaching 1.57 china national tobacco corporation products cases in 2014, available. The Chinese government largely controls China ’ s signing of the global of. Because of its cigarettes in 1980 ( Lin, 1984 ) reports and consulting to... English and Chinese language sources are consulted, the market has become increasingly saturated, and potential foreign looms. Increased to 44 billion sticks ( two-thirds of global sales ) in 2013 found inconsistencies in data key... Hundred within three years ( STMA, 2004 ) a springboard for globalisation would target Southeast Asia Japan Inc.. Closure of several export arms of provincial companies ( State Council, 1981 ) interest reported... Centralise the management of manufacturing and allow pooling of resources among factories ( Tong et al., 2008 ) as... The 28 provincial companies ( 1998–2009 ): //comtrade.un.org/ ) was identified through brands. Huge domestic market century with the automation of cigarette manufacturing overseas, premium brands enjoyed rising sales, as economy... Panama ) produces Chinese brands to receive personalised research and resources by email, an International for..., 1 personal contacts china national tobacco corporation products for CSV export support through advantageous policies such as priority to... Scale and reach of exports since the late 2000s, Chinese overseas supply chain has also improved WTO access china national tobacco corporation products... Result, a crowded and fragmented industry, was seen by the State Council, 1981 ) )!

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