China does not have one comprehensive tobacco control law, but several national laws and regulations that legislate tobacco. To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy. In 2000, the CNTIEC was reorganised and renamed the China Tobacco Import Export Group (CNTIEG). Fourth, CNTC is a ‘strategic asset seeker’, as it monitors foreign markets seeking investment opportunities for business growth through M&A. In 2008, CNTIEG became China Tobacco International (CTI), focused on supporting ‘CNTC’s strategic need to “go global”’ (Wang, 2008). British American Tobacco (BAT) China National Tobacco Corporation Davidoff Dharampal Satyapal DS Group Eastern Tobacco Company Fiedler & Lundgren AB FIN Branding Group LLC. View more. Additionally, the government under China National Tobacco Corporation (CNTC) manufactures tobacco products which accounts for approximately a third of global consumption. The development of new brands, to appeal to a wider global market beyond Chinese diasporas, is likely to increase via JVs with existing TTCs. The China National Tobacco Corporation (CNTC) controls 44 percent of the global cigarette market, making it the biggest cigarette company worldwide. 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 2003, the Beijing Cigarette Factory split from Beijing Tobacco Company to merge, along with the Tianjin Cigarette Factory, with the Shanghai Tobacco Group (STG) (Zhou, 2004). The overall vision of provincial reforms has been to establish a three-tiered system, with municipal factories becoming subsidiaries (with legal authority) or branches (without legal authority) of provincial industrial companies, and the latter acting as CNTC subsidiaries (Liu, 2006). A ‘long-term strategic cooperative partnership’ with PMI agreed in 2005 involves licensed production and distribution of Marlboro in China, and the establishment of jointly-owned China Tobacco Philip Morris International (CTPMI) to launch and distribute Chinese brands in foreign markets. 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. 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). Second, official Chinese data are government controlled and not verified by independent sources. At the time of writing there are negotiations for a similar JV between Yunnan Tobacco Industrial and Imperial Tobacco (Yu, 2015). , SWFI has 2 subsidiaries, 1 personal contacts available for CSV Export. View more. Source: Trade Map. It also engages in the tobacco management, importation, and export trade. With nearly one-third of the world’s smokers (300 million), and 40% of global tobacco production (2.5 trillion cigarettes), China has the largest tobacco industry in the world (Li, 2012). 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’. Tobacco consumption is calculated from monthly sales data from the China National Tobacco Corporation and demographic data from the China National Bureau of Statistics. Over the past 60 years, the CNTC has been focused on supplying a huge domestic market. The company expects to use the raised money to acquire brands and expand distribution channels into global markets. Registered in England & Wales No. To reassert central control, the CNTC was formed in 1981 to manage the 28 provincial companies (State Council, 1981). 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. Moreover, while consolidating to compete with TTCs, the Chinese industry has been reconfigured in ways that minimise competition among domestic firms. Map of distribution of CNTC’s foreign-based operations. Applying Dunning and Lundan (2008), the industry can be seen to have shifted sharply since the mid-2000s, from largely domestic focused, to increasingly outward looking in four ways. 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). The company produces flue cured tobacco, cigarettes and other products. This article is part of the special issue ‘The Emergence of Asian Tobacco Companies: Implications for Global Health Governance’. Provincial governments also introduced protectionist measures in the 1990s, including near monopolies, to protect local companies regardless of productivity and efficiency (Wang, 2009). Thus, they do not cover the CNTC’s expansion plans. Chinese exports, as a proportion of total production, remain relatively small but rising since 2004, from 4.35% to 5.08% by 2013. The Chinese Government largely controls China’s tobacco sector and limits the investment of foreign manufacturers in China. 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 … 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). IMARC offers market research reports and consulting services to clients consisting of, but not limited to, SMEs and Fortune 500 companies. This paper examines the global business strategy of the CNTC as a global public health challenge. Intake of tobacco can lead to several adverse health effects, which include chronic bronchitis, lung cancer, emphysema and increased risk of heart diseases. 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. ... First China Tobacco Company Ltd. (FCT) was established in 2012. It enjoys a virtual monopoly in China, which accounts for roughly 30% of the world’s total consumption of cigarettes, and is the world's largest manufacturer of tobacco products … 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). Cited by lists all citing articles based on Crossref citations.Articles with the Crossref icon will open in a new tab. The result, a crowded and fragmented industry, was seen by the STMA as problematic ahead of WTO accession and foreign competition. Figure 6. 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 initial potential offering (IPO) will help China National Tobacco Corporation to raise about $100 million. China National Tobacco Corporation, Japan Tobacco Inc., PT Gudang Garam Tbk, and ITC Limited are based in the region. Value of tobacco exports, 1992–2013 (US$ millions). Tobacco and Tobacco Products — The Sensory Evaluation Methods (YC/T138) Cigarette — The Sensory Evaluation Methods for Chinese-Stylistic Features (YC/T 497) ... and internal publication of the China National Tobacco Corporation pertaining to novel tobacco products. The higher volume in illicit tobacco sales also has a negative effect on public health as the quality of counterfeit tobacco products is questionable. As observed by industry analysts, As domestic firms in China mainly dominate the local cigarette industry, the industry’s globalization level is relatively low and is expected to remain low in the future … .The industry’s globalization level is low due to the low foreign ownership levels of the industry’s firms in China. 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. The restructuring of the industry from the mid-1990s saw the closure of several export arms of provincial companies (STMA, 1998b). China National Tobacco Corp. manufactures tobacco products. Headquarter is set in Vancouver, BC and operation center in Toronto, ON. 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. Gauging on revenues, CNTC is the largest company in the world that deal with tobacco products. Read more Read Tobacco Asia Online . Tobacco consumption is calculated from monthly sales data from the China National Tobacco Corporation and demographic data from the China National Bureau of Statistics. This would permit entry of Hongta brands into the Russian market, produced and distributed by Donskoy Tabak (Anon, 2012). View more. Register to receive personalised research and resources by email, An International Journal for Research, Policy and Practice. Tobacco Sales Bans are No Good. State-owned enterprise China National Tobacco Corporation is a near monopoly, manufacturing 98 percent of the tobacco products in China, … In 2008, a ‘merger of two giants’ occurred between Yunnan’s Hongyun and Honghe Groups, forming the Hongyun Honghe Tobacco Group. Through its subsidiaries, the company distributes its tobacco-based products in nearly 160 markets across the globe. Despite its negative effects, there has been a rise in the demand for tobacco across the globe. View more. China Tobacco: State Owned Enterprise in China, Asia. No potential conflict of interest was reported by the authors. Japan Tobacco International, or JTI, is the international unit of a Japan-based tobacco company, JT Group, which was established in the mid-1980s. This data exclude overseas production which has also risen sharply since 2008, reaching 1.57 million cases in 2014 (Qing, 2015). China became a party to the WHO Framework Convention on Tobacco Control (FCTC) in 2006. The country is the leading consumer of tobacco related products in the world. China National Tobacco Corporation is a company. At the 2013 meeting, five export manufacturing facilities in Shanghai, Guangdong, Yunnan, Hunan and Zhejiang, and Jilin were announced (Anon, 2013b), each focused on nearby regions and ‘cultural advantage’. 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). 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. By closing this message, you are consenting to our use of cookies. By China National Tobacco Corporation. The Chinese industry is advantaged by sheer size, weak domestic regulation and government support for overseas expansion. The China National Tobacco Corporation: From domestic to global dragon? Eight of these FCTC countries own 100% of at least one tobacco company, including China, Iran, Iraq, Lebanon, Syria, Thailand, Tunisia, and Vietnam. The CTIEC targets Europe, while United Overseas (Panama) produces Chinese brands for the Americas (CTI, 2014, 2014c). Tobacco was brought to China by trading merchants during the sixteenth century. 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). Policies in Place. Within the Chinese guanxi system, tobacco is still a ubiquitous gift acceptable on any occasion, particularly outside of urban areas. China tobacco imports [data file], 2016. China: Revenue in the Tobacco Products market is projected to reach US$234,628m in 2020. Formally separate entities, in practice the CNTC and STMA are ‘one institution with two name plates’ (STMA, 1997) governing the industry through a vertical bureaucracy (Wang, 2009). In 2006, this became known as the ‘two by ten’ strategy with plans to have ten large-scale manufacturers produce ten key brands. Gauging on revenues, CNTC is the largest company in the world that deal with tobacco products. To address these three caveats, triangulation of multiple data sources was undertaken where possible. However, without the existence of a specialized central government agency in charge, it was impossible to … The CNTC’s globalisation efforts are expected to intensify. Similarly, CNTC Director Xun Xinghua declared that the industry was ‘seizing all opportunities to expand and occupy foreign markets’ (Anon, 1993). The campaign is called ‘Year of Unsmoke’, with which the company has launched new versions of IQOS, a heated tobacco unit. Figure 5. Export markets have also begun to diversify beyond Asia. View more. 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). Estimated MC H-n-b will be launch at end of this year. First, historically, a large number of Chinese companies manufactured thousands of local brands at many different price points (Anon, 2014). Foreign operations have been established to secure tobacco leaf from Brazil, USA and Zimbabwe. Finally, trends in exports suggest an increasingly outward looking Chinese industry. Download your Global Tobacco Market Report Sample for FREE! Previous analyses of the global tobacco industry recognise the importance of, but generally exclude, the CNTC because of its strong domestic focus. 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). 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). For example, there were negotiations between Hongta Group and Donskoy Tabak in 2012 for Hongta’s purchase of 0.5% share of Russia’s largest national tobacco manufacturer. 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. This division currently distributes its products across 130 countries with a workforce of more than 45,000 employees. 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). The number of brands was dramatically reduced, to a few with broader appeal, to improve economies of scale and enable marketing abroad. 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. The market is expected to grow annually by 1.6% (CAGR 2020-2025). (IBIS World, n.d.). 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. Eleven relevant documents met our … Exports have grown rapidly by volume (Figure 6) following the establishment of five export manufacturing facilities in 2013. Five domestic giants from three regions have emerged through these reforms: Hongta Group and Hongyun Honghe Tobacco Group in Yunnan Province; STG; and Changsha Tobacco Group and Changde Group in Hunan Province (Wang, 2009). Tobacco industry interest in foreign expansion was first raised following China’s signing of the General Agreement on Tariffs and Trade in 1993. : https://www.imarcgroup.com/tobacco-processing-plant/requestsample. The strategic location of major offshore production bases in each region is a clear indication of efficiency seeking. Number of CNTC brands (1990s–2013). About us NEXT GENERATION PRODUCTS LTD is a company based out of United Kingdom. Chinese-language secondary literature (dissertations, articles and industry reports) was identified through the China Knowledge Network. The compiling of trend data drew on the same sources where available for consistency. While mentioning CNTC as a TTC competitor, the collection is limited to TTC documents dating primarily before the mid-2000s. Philip Morris has recently announced that it is shifting its focus on manufacturing ‘smoke free’ nicotine products. 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. A target of 8 million cases by 2020 was declared in 2014 with the aim of catching the sales volumes of leading TTCs (Anon, 2013b; Lu, 2014). Overseas, premium brands are seen as key to efforts to improve the perceived quality of Chinese products (Feng, 2014b). The China National Tobacco Corporation is by sales the largest single manufacturer of tobacco products in the world and boasts a monopoly in mainland China generating between 7 and 10% of government revenue. The primary and secondary data sources were compiled into a chronological narrative according to these three questions. More details about this company like involved buildings and projects are recorded here. 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). 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 findings of this paper suggest, however, that the Chinese industry has been steadily positioning itself to become a global player since the late 1990s. Tobacco farming is a lucrative business in China since it employs just about 17 million individuals. The China Law Education website was searched for official decrees and statements related to the tobacco industry. More + News. 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). Request Profile Update; Download Data 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. For instance, Viniton Group and Lao Liaozhong Hongta Fortune Tobacco have established production and distribution bases in Southeast Asia. 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. China is the world’s largest producer and consumer of tobacco products. Total number of Chinese tobacco companies (1998–2009). Figure 3. With more than 300 million smokers, China is a country with a high-burden of tobacco-use and, also, one of five focus countries for the Bloomberg Initiative to Reduce Tobacco Use. 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 … More + News. 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 addictive hormone triggers the central nervous system and increases heart rate, blood pressure and breathing. The China National Tobacco Corporation was founded in January 1982. The majority of the products manufactured by China National Tobacco … The new variants, namely IQOS 3 and IQOS 3 Multi, were launched with Dubai Duty Free in July 2019. 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). (2010) describe, TTCs pressed hard to access the closed Chinese market during accession negotiations. The industry anticipated change following WTO accession. In 2000 RJR agreed to develop a jointly-owned brand for sale in China and the US (RJR, 2000). 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 … 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). 5 Howick Place | London | SW1P 1WG. Abstract. By the late 2000s, Chinese overseas supply chain has also improved. 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). Chinese cigarette exports date from the creation of the China Shenzhen Tobacco Trading Centre in 1984. China National Tobacco Corporation. 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 2014, the State Council released national tobacco control regulations in public areas, and strict legislations on tobacco control were proposed by the Beijing Municipal Government. 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). Using indicators set out in Lee and Eckhardt (2016), and Lee et al. ... 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