Tobacco Asia

Volume 18, Number 4

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76 tobaccoasia By Allen Liao Shanghai Tobacco Group (STG), is trying to de- velop new cigarette products in an effort to boost profitability amid a somewhat unfavorable situa- tion faced by the tobacco industry. On August 4, 2014, the annual sales income of Chunghwa – the flagship cigarette brand of STG – topped CNY100 billion (US$16.23 billion) so far this year, enabling it to achieve the annual sales income objective one month earlier than in 2013. This is viewed as a major achievement by STG in its endeavor to upgrade the Chunghwa brand fam- ily. Although a number of cigarette brands repre- sented by Chunghwa have maintained an upward trend, the tobacco industry as a whole has seen a slowdown in the annual growth rate, with in- creases in inventories held, narrowing down the structural space and approaching a turning point in demand. Shi Chao, general manager of STG, is a strong supporter of the idea that innovation is an essen- tial force for addressing those difficulties, and that only by strengthening its core can an enterprise overcome the barriers on its way toward greater success in a sustainable manner. "Although transnational tobacco giants have registered declines in cigarette sales over recent years, they have realized continued increases in profits," said Shi, giving an example that continued development of new types of tobacco products, including heated nonflammable low-temperature cigarettes and electronic cigarettes, has become a new point of growth. "What is crucial is that they can face up to market risks and can always main- tain their vigor and vitality in innovation," At the 2014 national tobacco work confer- ence, the State Tobacco Monopoly Administra- tion (STMA) explicitly pointed out the paramount Shanghai Tobacco Group Sets its Sights on Innovation An inspector of Shanghai Tobacco Group is testing the products in the laboratory.

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