China National Tobacco Corporation is a company. TTC hopes that these agreements would lead to greater market access were disappointed in 2006 when the government announced a ban on all new manufacturing facilities, including JVs with foreign companies, as part of stronger tobacco control measures (Ding, 2006). In 2011 the first annual meeting on tobacco market expansion was held which adopted a three-step strategy for export growth: (a) market entry and establishment of a distribution network; (b) licensed production by local manufacturers; and (c) establishment of local production facilities (Ju, 2011). We use cookies to improve your website experience. Eleven relevant documents met our … As PM realised, CNTC only wants ‘to acquire foreign technology and management skills without giving away much to foreigners’ (PM, 2002). The findings of this paper suggest, however, that the Chinese industry has been steadily positioning itself to become a global player since the late 1990s. In 2015, a link between the ‘One Belt, One Road’ and ‘Go Global’ strategy was announced to improve CNTC’s access foreign markets (Qing, 2015). Despite the size of the Chinese industry, given its domestic orientation, analyses of tobacco industry globalisation to date have focused on leading transnational tobacco companies (TTCs) (Lee, Eckhardt, & Holden, 2016). The aim has been to reduce local government power over the industry, and increase competition across the same tiers in the industry, by dismantling its vertical structure and bureaucracy (Wang, 2009). Source: Compiled from BAT (2013), Hongta Group (2010), STMA (2006, 2009, 2012), Tobacco-free Kids (2010). (2016), for which there is available data, CNTC appears poised to ‘go global’, but its global business strategy is unlikely to follow the pattern of existing TTCs. Based in Switzerland, CTPMI launched three so-called ‘heritage brands’ (RGD, Dubliss, and Harmony) in 2008, using PMI’s distribution networks in Central and Eastern Europe and Latin America (Tobacco Free Kids, 2010). China National Tobacco Corporation is the largest tobacco producer in the entire world owned by the Chinese government (Young, 2006). E-Cigarette Market Report an Forecast 2019. If even partially realised, the global ambitions of the Chinese tobacco industry will have profound impacts for public health. Local monopoly bureaus regulate and administer the industry at the provincial level (Xu & He, 2003). At the time of writing there are negotiations for a similar JV between Yunnan Tobacco Industrial and Imperial Tobacco (Yu, 2015). The paper does not draw on industry documents held in the Truth Tobacco Documents Library. This paper examines the global business strategy of the CNTC as a global public health challenge. The paper concludes that the company has undergone substantial change over the past two decades and is consequently poised to become a new global player in the tobacco industry. This initiative refers to the extension of the so-called Silk Road Economic Belt, linking western China with Europe through Central Asia, to the new Maritime Silk Road from China’s southern coast to Europe via North Africa and Southeast Asia (Knowler, 2015). 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). Supported by favourable government policies and substantial resources, the restructured domestic industry has achieved greater economies of scale. Similarly, CNTC partnered with BAT to form China Tobacco British American Tobacco (CTBAT) International in 2013, with worldwide rights to BAT brand State Express 555, and Chinese brand Double Happiness outside of China (BAT, 2013). The China National Tobacco Company (CNTC) is a state-owned enterprise, with a monopoly of the cigarette market, accounting for 98% of domestic sales.5–7 In 2015, CNTC’s gross profit was ¥303 billion (Chinese yuan renminbi, RMB) (about US$48 billion),8 making it the most profitable company in the country. Mid-priced products saw modest growth, while the economy segment fell dramatically from 59.7% to 28.3% during the same period (Euromonitor, 2013, 2015). This began to change in the mid-2000s as the CNTC looked to expand foreign production and distribution of Chinese brands. From 1991 to 1995, CNTC exported over 100 brands to 37 countries including Virginia (flue-cured) cigarettes to Southeast Asia; blended cigarettes to Europe, the USA, Russia and Africa; and herbal cigarettes to Korea and Japan (STMA, 1996). 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 China Tobacco Yearbook (1981–2014) was reviewed for information on key strategies and annual industry performance. 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. It is expected that CNTC will soon progress to M&As of small and medium-sized foreign tobacco companies, mimicking TTCs such as JTI and Imperial Tobacco (Qing, 2015). This article is part of the special issue ‘The Emergence of Asian Tobacco Companies: Implications for Global Health Governance’. By China National Tobacco Corporation. The limited scholarly attention to globalisation and the CNTC to date has come largely from business studies (Wang, 2009). As stated by STMA Director Jiang Ming, to ensure long-term development of the tobacco industry, ‘we must follow a “Big Tobacco” strategy’ (Huang, 1993). Importantly, FDI has been coordinated to minimise competition among Chinese companies on the global market (CTI, 2014c). The market is expected to grow annually by 1.6% (CAGR 2020-2025). Number of CNTC brands (1990s–2013). The China National Tobacco Corporation was founded in January 1982. However, the industry was also highly uncoordinated, controlled at the provincial level by local monopoly offices reporting to ministries of light industries, commerce and other financial entities (STMA, 1997). Imperial Tobacco’s West brand was licensed to Hongta Group in 2003 (Hongta Group, 2014). China has by far the biggest tobacco company in the world by market share (China National Tobacco Corp; CNTC), and Japan’s ranks fourth (Japan Tobacco; JT).5 In Japan, the Finance Ministry by law retains a minimum one third stake in JT, the successor company to the nation’s former tobacco monopoly, which was ostensibly privatised in 1985. Browse Topics. Only the licensed retailers … 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). Latest News . 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. More details about this company like involved buildings and projects are recorded here. The administration is responsible for policy and enforcing regulations, such as those governing warnings on packaging. The initial potential offering (IPO) will help China National Tobacco Corporation to raise about $100 million. 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. China National Tobacco Corp, the world's largest maker of tobacco products by revenue, announced during its annual meeting in Beijing last week that … View more. China does not have one comprehensive tobacco control law, but several national laws and regulations that legislate tobacco. Headquarter is set in Vancouver, BC and operation center in Toronto, ON. As Holden et al. These are likely to appeal to overseas Chinese, rather than serve as global brands, given their close affinity with Chinese cultural tastes and practices. Request Profile Update; Download Data HEFEI, China, Jan. 28, 2019 /PRNewswire/ -- China Tobacco Anhui Industry Corporation, a subsidiary of China National Tobacco Corporation, announces that a … 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). In 2004, sixteen industrial companies were established (Li, 2006). Total number of Chinese tobacco companies (1998–2009). China National Tobacco Corporation. Estimated MC H-n-b will be launch at end of this year. Download your Global Tobacco Market Report Sample for FREE! On a global scale, CNTC profits exceed British American Tobacco (BAT), Philip Morris International (PMI) and Altria combined (Bloomberg News, 2012). The State Council issued the Rules on Tobacco Monopoly in September … State Tobacco Monopoly Administration I. To date, however, the Chinese government has retained a firm grip on the industry and market access, limiting JVs to technology transfers and leaf development and, more recently, reciprocal production and distribution agreements. About us NEXT GENERATION PRODUCTS LTD is a company based out of United Kingdom. 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. Another indicator of globalisation is product development to promote a small number of Chinese ‘heritage’ brands overseas, as well as premium brands. The new variants, namely IQOS 3 and IQOS 3 Multi, were launched with Dubai Duty Free in July 2019. To triangulate Chinese source data, we searched Google and Baidu for news on the globalisation ambitions of the Chinese industry. The China National Tobacco Corporation (CNTC) controls 44 percent of the global cigarette market, making it the biggest cigarette company worldwide. However, the company has recently announced that it plans to list its international unit, China Tobacco International, on the Hong Kong stock exchange. For example, RJR licensed the Xiamen Cigarette Factory to produce Camel cigarettes in 1980 (Lin, 1984). In 2000 RJR agreed to develop a jointly-owned brand for sale in China and the US (RJR, 2000). Tobacco farming is a lucrative business in China since it employs just about 17 million individuals. Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine. In 2008, CNTIEG became China Tobacco International (CTI), focused on supporting ‘CNTC’s strategic need to “go global”’ (Wang, 2008). Our team of skilled analysts focuses on understanding the requirements of our clients so as to provide insights best suited to their unique needs. Political instability and conflict over decades undermined attempts to regulate the industry (STMA, 1997). Corporate governance reforms were also accelerated in 2005, with manufacturing facilities becoming limited liability companies led by boards of directors (Liu, 2006). China National Tobacco, a state monopoly that is by far the biggest cigarette maker in the world, plans to list its international unit on the Hong Kong stock … Profits and tax revenues were distributed among the central and provincial governments, CNTC and various subsidiaries (State Council, 1981). The industry is likely to remain state-owned and controlled for the foreseeable future. Over the past 60 years, the CNTC has been focused on supplying a huge domestic market. It also engages in the tobacco management, importation, and export trade. Overseas, premium brands are seen as key to efforts to improve the perceived quality of Chinese products (Feng, 2014b). 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. In 2000, the CNTIEC was reorganised and renamed the China Tobacco Import Export Group (CNTIEG). Policies in Place. In 2013 it manufactured about 2.5 trillion cigarettes. Abstract. Faculty of Health Sciences, Simon Fraser University, Burnaby, Canada, Note: The CNTC and STMA also manage other tobacco-related entities including leaf, machinery, accessory materials, research institutes, technology centres and tobacco museums, China Council for the Promotion of International Trade. The China National Tobacco Corp., which serves China’s 300 million smokers, is by far the largest cigarette maker in the world. WHO age-standardized prevalence for daily adult smoking in China was estimated to be 22% in 2012. China tobacco imports [data file], 2016. More details about this company like involved buildings and projects are recorded here. Chinese-language secondary literature (dissertations, articles and industry reports) was identified through the China Knowledge Network. Hong Kong and Macau received substantial investment due to their SEZ status and proximity to the mainland. The company was founded in January 1982 and is headquartered in Beijing, China. In 1999, JTI licensed production of Mild Seven to Shanghai Gaoyang International Tobacco Company (Lai, 2009). Much secondary analyses, in turn, are based on official sources. Tobacco Sales Bans are No Good. 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 China National Tobacco Corporation (CNTC), which produces one-third of the world's cigarettes, is the largest tobacco company in the world. China is the world’s largest producer and consumer of tobacco products. The CTIEC targets Europe, while United Overseas (Panama) produces Chinese brands for the Americas (CTI, 2014, 2014c). 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. Chinese cigarette exports date from the creation of the China Shenzhen Tobacco Trading Centre in 1984. Philip Morris has recently announced that it is shifting its focus on manufacturing ‘smoke free’ nicotine products. 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. China’s tobacco industry adopts a system of unified leadership, vertical management, and monopolized operation.The State Tobacco Monopoly Administration and China National Tobacco Corporation are responsible for centralized management of “staff, finance, properties, products, supply, distribution, domestic and foreign trade” of the country’s tobacco industry. British American Tobacco (BAT) is a multinational tobacco company, which is headquartered in London, United Kingdom. From a Chinese perspective, licensing allowed local firms to access new technology and knowhow (Lai, 2009), while keeping the industry under Chinese control. In 1963, the China Tobacco Industrial Corporation was established to try to achieve greater efficiencies through centralised management of procurement, production and sales (STMA, 1997). It operates in reduced-risk products with the supply of vaping tobacco products through the brands Ploom and Logic. 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. By the late 2000s, Chinese overseas supply chain has also improved. Chinese cigarette exports date from the creation of the China Shenzhen Tobacco Trading Centre in 1984. If successful, this will lead to increased global competition on price, new products and intensified marketing, all resulting in increased tobacco consumption. China became a party to the WHO Framework Convention on Tobacco Control (FCTC) in 2006. In 2014, the share of revenue contributed by foreign-funded enterprises (including those from Hong Kong, Macau and Taiwan) is expected to be only 0.1% of the industry’s total. State-owned enterprise China National Tobacco Corporation is a near monopoly, manufacturing 98 percent of the tobacco products in China, … Source: Compiled from UN Comtrade Database (2015). Source: Anon (2014). : https://www.imarcgroup.com/tobacco-processing-plant/requestsample. General Introduction of China Tobacco. 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. By closing this message, you are consenting to our use of cookies. There is also rapid growth of Chinese offshore production with over half of the 50.4 billion sticks of Chinese cigarettes sold internationally (2011) produced overseas (STMA, 2012). 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). Only about 1 % of its products are sold in the international market. 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). 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