Tobacco Asia

Volume 20, Number 5

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24 tobaccoasia / Issue 5, 2016 November / December Red Falcon and Dubliss SS Endless windswept steppes, horse-riding nomads living in yurts, Genghis Khan and his belligerent horde; these are probably the images most people conjure up when thinking of Mongolia. But since shaking off communism in 1990, the landlocked country of only around three million people (2016 est.) has made remarkable strides towards a free market economy and embarked on a vigorous in- dustrialization drive especially in the vicinity of its largest city and capital, Ulaanbaatar. That newfound economic freedom also en- couraged a number of entrepreneurs to set up a local cigarette manufacturing and distributing in- dustry from scratch (previously, practically all cig- arettes came from China and the Soviet Union). Soon after, Mongolia was "discovered" by the usual multinationals who – through local distribu- tion partners (see table 1) – successfully introduced some of the globe's best-known cigarette brands. The market conditions seemed favorable enough: Statistics show that about 40% of the adult popu- lation are tobacco consumers and that the average Mongolian starts smoking at an eyebrow-raising 14 years of age. But on the ground, the legal situation is not as carefree as it may appear. Starting in 2013, Mon- golia's parliament began enacting a very stringent revision of the tobacco control law of 2005, mak- ing it one of the toughest anti-smoking laws in the world (see side box). And those harsher regulations, including the provision that tobacco sales to per- sons under 21 years old are illegal, forced all play- ers to creatively adjust their marketing strategies in order to defend and develop their market shares. Mongol tobacco rules supreme In 2001, China Tobacco and a local businessman formed a joint venture, founding what is today Mongol Tobacco SO Co. Ltd – or as it is known by its local name, Mongol Tamkhi. While three more private local companies have since been li- censed by the government to manufacture and dis- Huge in landmass yet tiny in population and boasting one on the strictest tobacco laws on the planet, Mongolia nevertheless is a coveted market for both local and multinational companies. Mongolia's Cigarette Market: Small but Hotly Contested By Thomas Schmid

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