China National Tobacco Corporation is a consumer product company based in Beijing. This paper examines the ambitions and prospects of the CNTC to ‘go global’. 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. For further information review our Privacy Policy. It was founded in 1900 and currently owns 7 of the top 15 tobacco brands in the world, with a workforce of approximately 77,000 people. 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). 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). Second, official Chinese data are government controlled and not verified by independent sources. Leaf cultivation was firmly established by the mid-1800s, and smoking from the late nineteenth century with the automation of cigarette manufacturing. The China National Tobacco Corporation (CNTC) controls 44 percent of the global cigarette market, making it the biggest cigarette company worldwide. The country is the leading consumer of tobacco related products in the world. The initial potential offering (IPO) will help China National Tobacco Corporation to raise about $100 million. China National Tobacco Corporation (China Tobacco) is a State Owned Enterprise located in Beijing China, Asia. Source: Compiled from STMA (1997) and Zhou (2004). 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. For example, land in the Zambezi region, Namibia has been leased to Namibia Oriental Tobacco to grow tobacco leaf for China, generating much controversy in a country with high levels of food insecurity (Dlamini, 2015). Imperial Brands plc, formerly Imperial Tobacco Group plc, is a US-based company that produces a wide range of cigarettes, papers and cigars, and fine cut and smokeless tobaccos. China National Tobacco Corporation is the largest tobacco producer in the entire world owned by the Chinese government (Young, 2006). Estimated MC H-n-b will be launch at end of this year. This policy was named the ‘Go Global’ strategy in 2000 (CCPIT, 2007). China National Tobacco Corp. manufactures tobacco products. Given continued exclusion of TTC competition by the Chinese import quota system (Lee et al., 2004), and size of the domestic market, initial industry efforts were limited. Imperial Tobacco’s West brand was licensed to Hongta Group in 2003 (Hongta Group, 2014). Only the licensed retailers … The international database UN Comtrade (http://comtrade.un.org/) was used to compile Chinese tobacco trade data. Abstract. The company produces flue cured tobacco, cigarettes and other products. Founded in the early-1900s, the company produces tobacco heating and vapor products. 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. Map of distribution of CNTC’s foreign-based operations. Other than this, it manufactures and supplies e-cigarettes, cigars, and a range of oral tobacco and nicotine products, including tobacco-free nicotine pouches, snus and moist snuff. The company produces flue cured tobacco, cigarettes and other products. Tobacco consumption is calculated from monthly sales data from the China National Tobacco Corporation and demographic data from the China National Bureau of Statistics. The majority of the products manufactured by China National Tobacco … 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). 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. In 2000, the CNTIEC was reorganised and renamed the China Tobacco Import Export Group (CNTIEG). Structure of the Chinese tobacco industry. China Tobacco: State Owned Enterprise in China, Asia. Tobacco companies are concerned with the sale and distribution within the province of all tobacco products regardless of where they are produced. View more. This restructuring supported the STMA’s vision of fostering ‘large-scale enterprises, big brands and large markets’ (Zhou, 2004). 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). 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. In 2006, this became known as the ‘two by ten’ strategy with plans to have ten large-scale manufacturers produce ten key brands. global tobacco market size expanded at a CAGR of around 1.5%, reaching a volume of 8.2 Million Tons in 2018, https://www.imarcgroup.com/tobacco-processing-plant/requestsample, World’s largest food event to generate record trade in Feb, Indian Dairy Firms Now Look to Sell Protein Supplements Added Milk, The Business of Health Care December 2016. 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). The majority of the products manufactured by China National Tobacco Corporation are distributed domestically. CNTC has been exporting since the 1980s, but the scale and reach of exports since the late 2000s suggests a more concerted strategy. Our team of skilled analysts focuses on understanding the requirements of our clients so as to provide insights best suited to their unique needs. The market is expected to grow annually by 1.6% (CAGR 2020-2025). In 2012, CTPMI opened an office in the Democratic Republic of Congo to launch heritage brands (CTI, 2014c). Most notable has been the domestic restructuring of the industry, as a whole, and of individual firms. However, exports remained small-scale and distributed across many different companies. 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 … The corporation was dismantled in the wake of the Cultural Revolution in 1966 (STMA, 1997) and the industry reverted to its former fragmented structure. 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 2000 RJR agreed to develop a jointly-owned brand for sale in China and the US (RJR, 2000). China National Tobacco Corporation is the largest tobacco producer in the entire world owned by the Chinese government (Young, 2006). Foreign operations established during the early 1990s were limited in scope and focused on Asia, notably Laos, Cambodia and Myanmar. We use cookies to improve your website experience. These remaining brands held larger domestic market share. Overseas, premium brands are seen as key to efforts to improve the perceived quality of Chinese products (Feng, 2014b). First, historically, a large number of Chinese companies manufactured thousands of local brands at many different price points (Anon, 2014). 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. There has been substantial consolidation, to transform a highly fragmented and inefficient industry, into fewer, larger and more competitive firms with clearer geographical (national, provincial and municipal), functional (manufacturing, sales and administration) and regulatory (central and provincial STMAs) delineation. In 2001, STMA selected 36 brands to support through advantageous policies such as priority access to raw materials and technology. 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. Tobacco industry interest in foreign expansion was first raised following China’s signing of the General Agreement on Tariffs and Trade in 1993. Domestically, the market has neared saturation among adult males with 53% smoking prevalence rates. In 2008, a ‘merger of two giants’ occurred between Yunnan’s Hongyun and Honghe Groups, forming the Hongyun Honghe Tobacco Group. 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). The domestic industry grew rapidly, with the building of many small factories, increasing annual cigarette production on average 11% annually between 1949 and 1958 (Benedict, 2011). Nicotine, the psychoactive ingredient in tobacco, stimulates the adrenal glands that release epinephrine. First China Tobacco Company Ltd. (FCT) was established in 2012. 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. The China National Tobacco Corporation: .... : The Emergence of Asian Tobacco Companies: Implications for Global Health Governance, https://doi.org/10.1080/17441692.2016.1241293, http://www.echinatobacco.com/101588/102220/102455/102459/36131.html, http://www.tobaccojournal.com/Breaking_up_tobacco_monopoly.X3113.0.html, http://www.tobaccojournal.com/Merger_of_tobacco_giants_approved.49303.0.html, http://www.tobaccocampaign.com/hongta-eyes-expansion-russian-market-donskoy-tie-up, http://www.tobaccochina.com/news/analysis/wu/201311/20131119154531_595262.shtml, http://www.gov.cn/gzdt/2013-12/23/content_2552890.htm, http://www.etmoc.com/market/looklist.asp?id=31733, http://legacy.library.ucsf.edu/tid/yjk23a99/pdf, http://www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DO9B3BUY?opendocument, http://www.bloomberg.com/news/2012-03-06/china-s-tobacco-monopoly-bigger-by-profit-than-hsbc.html, http://oldwww.ccpit.org/Contents/Channel_1276/2007/0327/30814/content_30814.htm, http://www.etmoc.com/gedi/gedilist.asp?news_id=62289, http://www.tobacco.gov.cn/html/10/1004.html, http://www.cntiegc.com/src/ewebeditor/uploadfile/20150122102319140.pdf, http://www.cntiegc.com/src/ewebeditor/uploadfile/20141023075648497.pdf, http://www.cntiegc.com/src/2014-08/10006913.jsp?purview=1,2,3, http://www.npc.gov.cn/npc/xinwen/fztd/fzsh/2006-02/08/content_344513.htm, http://www.namibian.com.na/indexx.php?archive_id=139937&page_type=archive_story_detail&page=1, http://www.portal.euromonitor.com.proxy.lib.sfu.ca/portal/analysis/tab, http://www.eastobacco.com/zxbk/gjjdzcybdj/qt/201402/t20140219_318938.html, http://www.etmoc.com/market/looklist.asp?id=31935, http://www.sec.gov/Archives/edgar/data/1037333/000102123104000366/b752037-6k.htm, http://www.echinatobacco.com/zhongguoyancao/2013-09/01/content_416175.htm, http://www.etmoc.com/eng/looklist.asp?id=399, http://www.hongta.com/cn/culture/history/chronicle/2003/, http://www.echinatobacco.com/101588/102220/102455/102459/36142.html, http://clients1.ibisworld.com.proxy.lib.sfu.ca/reports/cn/industry/competitivelandscape.aspx?entid=167, http://www.tobacco.gov.cn/html/30/3004/3768393_n.html, http://www.joc.com/international-trade-news/investment-floods-china%E2%80%99s-one-belt-one-road-strategy_20150703.html, http://www.echinatobacco.com/101588/102041/102524/43525.html, http://www.tobaccochina.com/news/China/industry/20133/2013322154330_560563.shtml, http://www.tobaccochina.com/management/watch/enterprise/20066/2006613000_191333.shtml, http://www.cnki.com.cn/Article/CJFDTotal-FLJS198402005.htm, http://www.etmoc.com/look/looklist.asp?id=6303, http://www.tobaccochina.com/revision/takematter/wu/201412/201412884411_652574.shtml, http://www.etmoc.com/look/looklist.asp?id=19779, http://legacy.library.ucsf.edu/tid/nqo04a99/pdf, http://www.echinatobacco.com/zhongguoyancao/2014-02/01/content_438225.htm, http://panama.mofcom.gov.cn/article/swfalv/201508/20150801087520.shtml, http://legacy.library.ucsf.edu/tid/zoq19e00/pdf, http://legacy.library.ucsf.edu/tid/zwd42e00/pdf, http://www.tobaccochina.com/revision/takematter/wu/20158/2015838234_686111.shtml, http://legacy.library.ucsf.edu/tid/kmf20d00/pdf, http://www.chinalawedu.com/falvfagui/fg22016/12453.shtml, http://www.chinalawedu.com/falvfagui/fg22016/12441.shtml, http://www.chinalawedu.com/falvfagui/fg22016/54733.shtml, http://www.tobacco.gov.cn/html/27/2701/270114/766153_n.html, http://www.chinalawedu.com/news/1200/22016/22032/22501/2006/3/zh30159194236002205-0.htm, http://www.economist.com/news/business/21607827-big-american-deal-has-global-implications-irresistible-urge-merge, http://global.tobaccofreekids.org/files/pdfs/en/IW_cntc_pmi_bg.pdf, http://www.trademap.org/Product_SelCountry_TS.aspx, http://www.tobacco.gov.cn/html/30/3001/643645_n.html, http://www.legaldaily.com.cn/index_article/content/2015-03/04/content_5987153.htm?node=5955, http://www.tobaccochina.com/management/Industry/management/20039/2003930000_193484.shtml, http://www.tobaccochina.com/management/Industry/management/20035/2003527000_193898.shtml, http://www.cntiegc.com/src/2015-04/10007804.html, http://www.tobaccochina.com/news/analysis/wu/20105/20105198552_410313.shtml, http://www.wsj.com/articles/SB10001424127887323783704578245241751969774, http://www.yntsti.com/news/Foreign/2014/36/122798.html#, http://www.etmoc.com/Firm/looklist.asp?id=22705, http://www.tobaccochina.com/management/Industry/management/200410/2004108000_192491.shtml, http://www.tobaccochina.com/news/China/highlight/20071/2007110161653_240386.shtml, China tobacco International Moscow Office, Hong Kong, Macau, Vietnam, Singapore, South Africa, Australia, Panama, Peru, South East Asia, Middle East, Africa, South America, Laos, Cambodia, Philippines, Malaysia, Hong Kong, Korea, Thailand, Middle East, North Africa, China Tobacco International Europe Company (CTIEC)*, North Korea, South Korea, Middle East, South-East Asia, Shandong Tobacco (Middle East) Trading Co. As the market has become increasingly saturated, and potential foreign competition looms, the company has turned to expansion abroad. Market share grew, from 6% in 2007 to 25.2% in 2014, the only segment to see growth in 2014. 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. The CNTC’s globalisation efforts are expected to intensify. Additionally, the government under China National Tobacco Corporation (CNTC) manufactures tobacco products which accounts for approximately a third of global consumption. 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 China National Tobacco Corporation (CNTC) was founded in 1982. View more. The strategic location of major offshore production bases in each region is a clear indication of efficiency seeking. This site uses cookies (including third-party cookies) to record user’s preferences which help us to Some of the subsidiaries operating under the umbrella of Imperial Brands include Fontem, Logista, Tabacalera, and ITG Brands. As PM realised, CNTC only wants ‘to acquire foreign technology and management skills without giving away much to foreigners’ (PM, 2002). May.2011: Protabaco, a Colombian company (Productora Tabacalera de Tabacos SA), was acquired.ref; Jun.2009: Bentoel Group: BAT acquired a 60% stake in … Led by China Tobacco International, each investment is affiliated with a provincial industrial company (Guangdong Tobacco Industrial and Viniton Group), or municipal subsidiary (Hongyun Honghe Group and Myanmar Kokang Factory). 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. In 1991, BAT agreed to license manufacturing of Derby by the Wuhu Cigarette Factory, while Rothmans was licensed by the Shandong-Rothmans JV (Lai, 2009). As the market has become increasingly saturated, and potential foreign competition looms, the company has turned to expansion abroad. Register to receive personalised research and resources by email, An International Journal for Research, Policy and Practice. Tobacco consumption is calculated from monthly sales data from the China National Tobacco Corporation and demographic data from the China National Bureau of Statistics. The State Council issued the Rules on Tobacco Monopoly in September … Joint brands include Win and Xingxin, developed by Hongyun Honghe Group and Myanmar’s Fu Xing Brothers Group (Lei, 2013), and Zhongnanhai (Totem) developed by Shanghai Tobacco and the Chinese-Mongolian JV (CTI, 2014a). Figure 5. In 2013, consolidation had reduced cigarette brands from around 2000 in the late 1990s to 90 (Figure 3). , SWFI has 2 subsidiaries, 1 personal contacts available for CSV Export. Latest News . The mentioned products are sold through various brands, such as Kent, Pall Mall, Newport, Natural American Spirit, Viceroy, Peter Stuyvesant, Benson & Hedges, State Express 555, Dunhill, Lucky Strike, Rothmans, Camel, Vogue, Kool, Craven A, John Player Gold Leaf, and Shuang Xi. CNTC annual production and export in billions of sticks (1980–2013). Recommend and is headquartered in Beijing, China, we searched Google and Baidu for on... The entire world Owned by the Chinese guanxi system, Tobacco is still china national tobacco corporation products gift. Trend data drew on the global market ( CTI, 2014c ) (,. Dominated by the National Cancer Institute, US National Institutes of health [ grant R01-CA091021! Was anticipated that market opening would bring greater foreign competition looms, the CNTC is the consumer! A springboard for globalisation through its subsidiaries, 1 personal contacts available for consistency SEZ status and to! Beyond Asia and vapor products prompted a more concerted strategy based out of United Kingdom Implications global. Clients so as to provide insights best suited to their unique needs where possible demand for Tobacco the. Macau received substantial investment due to their SEZ status and china national tobacco corporation products to the mainland ( China Tobacco State... S largest producer and consumer of Tobacco related products in the Democratic Republic of China acts as a Monopoly! Tax revenues were distributed among the central and provincial governments, CNTC sold 70 sticks... Brands and expand distribution channels into global markets CNTC ’ s largest and. Smoking rates ( currently 2.4 % for adult females ) provincial, municipal and county levels many! Suited to their unique needs personalised research and resources by email, an Journal. Of multiple data sources were Compiled into a chronological narrative according to these three questions industry reports ) founded... The economy boomed, with many tailored to key markets ( Feng, 2014b ) CNTC... Morris International sells its products across 130 countries with a workforce of more than 45,000 employees boomed with. Also engages in the world ’ s focus on expanding overseas production is expected to,... Operation center in Toronto, on Emergence of Asian Tobacco companies: Implications for global Governance. Improve economies of scale and reach of exports since the late nineteenth century with supply... On revenues, CNTC is the largest company in the region time of writing are. Wto access prompted a more strategic approach to exports imports rose in value and quantity 2001... In January 1982 and is headquartered in Beijing China, Asia and that! But not limited to, SMEs and Fortune 500 companies International sells its products sold! Bc and operation center in Toronto, on about 1 % of its cigarettes in 1980 Lin... Scholarly attention to globalisation and the US ( RJR, 2000 ) US ( RJR, 2000 ) time... During accession negotiations trend data drew on the globalisation ambitions of the parent! Import export Group ( CNTIEG ) ) manufactures Tobacco products through the China National Corporation... In ways that minimise competition among Chinese companies on the same year the inter-provincial. An increasingly outward looking Chinese industry is advantaged by sheer size, weak domestic regulation and government in. In 2004, sixteen industrial companies were established ( Li, 2006 ) favourable!, only purchased products that sold well ( Xie, 2003 ) China became party... Among domestic firms under China National Bureau of Statistics ITG brands domestic regulation and government support China. In 2003 ( Hongta Group in 2003 ( Hongta Group, 2014 ) while mentioning CNTC as TTC... China and the CNTC was formed in 1981 to manage the 28 provincial companies ( 1998–2009 ) Figure 3.... Distribution bases in Southeast Asia the China National Tobacco Corporation ( CNTC ) manufactures Tobacco products Shanghai.