Issue link: https://read.dmtmag.com/i/550325
48 tobaccoasia / Issue 3, 2015 (July/August) to the numerous retailers who much hold a valid monopoly license. It is those retailers that eventu- ally sell cigarettes. The 33 aforementioned provincial enterpris- es correspond to the 33 provincial-level regions (provinces, municipalities directly under the con- trol of the central government, and autonomous regions) across China, with each region repre- sented by a single commercial enterprise of the to- bacco industry. However, these enterprises are not directly in charge of cigarette sales. Rather, they are responsible for overall planning for cigarette marketing quotas and cigarette marketing strate- gies, etc. in their respective provinces. Instead, the entities that are specifically responsible for ciga- rette sales are only those under their control – pre- fecture-level commercial enterprises. Whether a cigarette brand can gain traction and consumer recognition depends to a great extent on its development, almost irrespective of product quality. For the time being, cigarette brands in China are not highly centralized, with a chaotic structure of "specifications". The numer- ous existing brands are quite different from each other in terms of their strengths or weaknesses. This leads to a situation where development of cigarette brands actually faces both opportunities and challenges. Which is why brand development is of particular importance for whether or not a brand can stand out from the crowd. The tobacco commercial enterprises play a very important role in brands development in China. Presently, each of the 17 manufacturing en- terprises in tobacco has 2-3 cigarette brands, and each of their factories manufactures those spe- cific branded products. Different from the 33 provincial-level commercial enterprises, the 17 manufacturers only represent some of the Chinese regions. In the future, the number of manufactur- ing enterprises may shrink, which is related to the strategy of the industry to promote development of extra-large brands, and is an inevitable step for the development of the industry. Disadvantaged manufacturing enterprises will be phased out, and resources of the manufacturing sector of the to- bacco industry will be concentrated around the most capable enterprises and brands. In 2014, the Chinese tobacco industry gener- ated a total of RMB1.05176 trillion (US$166.9 bil- lion), an increase of RMB95.77 billion, or 10.02%, year-on-year. Last year, the industry paid a total of RMB911.03 billion to the government in taxes and revenues, up RMB94.91 billion, or 11.63%, year-on-year. Obviously, its results look great. The growth can be attributed to the system of state to- bacco monopoly, as well as concerted efforts on the part of both the manufacturing and commercial enterprises.