China Tobacco

China National Tobacco Corporation (Chinese: 中国烟草总公司), branded as China Tobacco (中国烟草), is a national key state-owned corporation with chartered monopoly status in China to manufacture and sell tobacco products.

China Tobacco

China Tobacco headquarters in Beijing
Native name	中国烟草
Company type	Government agency and State-owned enterprise (one institution with two names)
Industry	Tobacco
Founded	January 1982
Headquarters	55 South Yuetan Street, Xicheng District, Beijing, China, 100045
Area served	China
Key people	Zhang Jianmin (张建民 Director of State Tobacco Monopoly Administration, President of China National Tobacco Corporation)
Products	Cigarettes
Owner	Chinese Central Government
Parent	Ministry of Industry and Information Technology
Website	www.tobacco.gov.cn

China Tobacco
Simplified Chinese	中国烟草
Traditional Chinese	中國煙草
Transcriptions
China National Tobacco Corporation
Simplified Chinese	中国烟草总公司
Traditional Chinese	中國煙草總公司
Transcriptions
Second alternative Chinese name
Simplified Chinese	国家烟草专卖局
Traditional Chinese	國家菸草專賣局
Transcriptions Standard Mandarin Hanyu Pinyin Guójiā Yāncǎo Zhuānmài Jú
Third alternative Chinese name
Simplified Chinese	国家烟草局
Traditional Chinese	國家煙草局
Transcriptions

Pearl River Tower, the new office in Guangzhou

The State Tobacco Monopoly Administration (STMA; 国家烟草专卖局; Guójiā Yāncǎo Zhuānmài Jú) is a Chinese government agency responsible for national tobacco monopoly regulation. Under the policy of one institution with two names, the two agencies are co-located in the same office and share the same website.^[1]

China Tobacco enjoys a legal monopoly in the country,^[2] accounting for 96% of cigarette sales in the country, and is the world's largest manufacturer of tobacco products by revenue. It exports a small proportion of its production, mostly to Asian markets.

History

In 1981, Chinese leader Deng Xiaoping established the China National Tobacco Corporation in order to modernize the previously chaotic tobacco market in China. In 1983, the State Tobacco Monopoly Administration was also established.^[3]

A major objective of China Tobacco and the STMA has been modernization. As recently as the 1980s, China's independent tobacco factories used outdated equipment to the extent that some processes were even carried out by hand. To accomplish their goal of modernization, the STMA allowed a small number of foreign companies into the country, in exchange for modern equipment. Though deals generally favored China, it allowed foreign companies to gain hard-to-come-by connections within China, and at high levels within the tobacco monopoly itself. The acceptance of foreign competition sparked a massive demand for tobacco production equipment in the 1990s, which has since slowed. However, major factories in China now^[when?] count their production of cigarettes in tens of thousands per hour.

China Tobacco played a key role in watering down the effects of the WHO Framework Convention on Tobacco Control in China. It established an internal team to advance alternatives to draft language viewed as harmful to its business, which also hosted visits by key government officials to tobacco factories, sponsored talks, produced research papers and published a weekly magazine to promote its ideas.^[3] After the final text of the treaty was agreed on in May 2003, the staff of China Tobacco watered down the Chinese translation, replacing many English words with weaker Chinese terms.^[3]

At the same time, China Tobacco has consolidated its factory base; currently,^[when?] there are 130 cigarette factories in China, compared to 180 in 1997. To further their goal of consolidation, China Tobacco plans to reduce the number of factories below 100. This has led to increased efficiency within the industry, allowing for greater production and brand variety than were possible before. In fact, many brands made by only one or two small regional factories have been licensed to large factories, becoming nationwide successes.

Organization and functions

The China National Tobacco Corporation and the State Tobacco Monopoly Administration are one institution with two names. The STMA is an agency of the Ministry of Industry and Information Technology.^[3] The organization is responsible for enforcing the tobacco monopoly in China, and operates as the state-owned enterprise China Tobacco for marketing, production, distribution, and sales of tobacco products.^[4] Branch offices of the company are affiliated under provincial bureaus of the tobacco monopoly.^[5]

As of 2022^[update], China Tobacco controls 96% of the country's cigarette market, and is responsible for 46% of cigarette sales worldwide. In the same year, the company generated around $213 billion (¥1.44 trillion) in revenue.^[3]

The organization of China Tobacco is decentralized locally.^[6] China Tobacco contracts out orders to smaller, local factories.^{[citation needed]} In turn these factories fill orders and deliver them for distribution to China Tobacco's distribution chain. The smaller local factories pay a sort of tax to China Tobacco, but keep much of their profit. In turn, retail distributors buy cigarettes from China Tobacco, and the profits realized from those sales is in turn taxed by the STMA.^{[citation needed]}

China Tobacco is among the state entities which contribute to the China Integrated Circuit Industry Investment Fund, which was established in an effort to decrease China's reliance on foreign semiconductor companies.^[7]: 274 The fund was established in 2014.^[7]: 274

Regulation

Advertising in print, radio, and television has been banned in China, and outdoor ads require prior approval provided they are not in one of nearly 100 local jurisdictions where outdoor tobacco ads are banned. These restrictions have led China Tobacco to adopt a strategy that harkens back to the 1960s and 1970s in the United States, with cigarette girls: attractive women dressed in brand logos, handing out samples, lighters, and promotional material in front of clubs and bars. Another form of circumvention is printing outdoor advertisements in the name of another entity, the latter's name being clearly printed on the material. For example, the Hongtashan brand mentioned above has recently published their new climbing-themed advertisements through a Hongtashan Climbing Club.

Brands

China Tobacco, like many other tobacco companies, produces a plethora of brands – over 900, the largest of which, Hongtashan (Red Pagoda Hill), accounts for only 4% of total sales.^{[citation needed]} The company also markets premium brands, notably Chunghwa. Despite the existence of such premium brands, they are uncommon in rural areas.

Trends in cigarette buying have also influenced China Tobacco. In recent years several varieties of cigarettes targeted at women have been released (breaking a longstanding taboo). Varieties common internationally are also common in China: Unfiltered, Filters, Lights, Ultra Lights, 100's, and 120's are all available in a variety of brands.

Foreign brands are not unknown in China, since their introduction with the advent of China Tobacco and the STMA. Marlboro, 234 ^[id], Camel, Kool, Lucky Strike, 555, and a variety of other brands can all be found throughout major cities in China. However, while these brands are marketed as premium brands outside of China, within China they are made locally under license or joint venture. Foreign sales make up only 3 percent of the Chinese market, yet account for 51 billion cigarettes every year.

See also

• Smoking in China
• World Health Organization Framework Convention on Tobacco Control
• List of companies of China