Tobacco Asia

Volume 19, Number 3

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52 tobaccoasia / Issue 3, 2015 (July/August) CT Hubei's predecessor was the Hankou sub- sidiary of Nanyang Brothers Tobacco Co. Ltd. in the early 20th century. In 2003, CT Hubei was incorporated from the former Wuhan Tobacco Group and the Three Gorges cigarette factory. Today, the CT Hubei's scope of operation covers production and marketing of tobacco products, import of cigarette materials and tobacco machin- ery, export of cigarette products, etc. CT Hubei currently has six production facilities, all in Hu- bei Province (Wuhan, Xiangfan, Three Gorges, Hong'an, Guangshui, and Enshi). The leading competitive brands of CT Hubei are Yellow Crane Tower and Red Golden Dragon. In 2014, CT Hubei generated over RMB50 billion in taxes and profits from its operations within the province, a net in- crease of RMB10 billion year-on-year, showing the largest increase in annual taxes and profits among all tobacco groups in China last year. If earnings from the commercial sector and licensed use of its brands in other regions are also taken into ac- count, the total amount of annual taxes and prof- its generated by CT Hubei topped RMB65 billion in annual taxes and profits in 2014. Also in 2014, the company saw its annual wholesale value reach RMB100.9 billion, becomeing first among all to- bacco companies in China. CT Zhejiang's scope of operation mainly in- cludes production and marketing of tobacco products, trading in cigarette materials, parts, and components of tobacco machinery, import of leaf tobacco and export of cigarette products, produc- tion and operations in connection with tobacco products manufacturing and marketing, as well as operations in business diversification and opera- tions in assets. CT Zhejiang now has two cigarette factories both in Zhejiang Province (Hangzhou and Ningbo), with Liqun, The Great Red Eagle, and The Lion being as its three leading brands. While focus- ing its energy on developing domestic markets, CT Zhejiang also actively develops overseas markets, with its Modern brand, now exported to more than 20 countries around the world including the Middle East, South America, and Indonesia. In 2014, CT Zhejiang strengthened its efforts to develop international markets and extend op- erations in various parts of the world, fulfilling the target of exporting 8 billion cigarettes including 1 billion of the Liqun brand, in international markets for the 2011-2015 five-year period one year ahead of schedule. Presently, CT Jiangsu has three cigarette pro- duction facilities in Nanjing, Xuzhou, and Huaiyin, and two wholly-owned subsidiaries (Nantong Cig- arette Filter Tip Co. and Jiangsu Xinyuan Tobacco Sheets Co.), all in Jiangsu Province. The company is a tobacco manufacturing enterprise group that integrates the businesses of cigarette production and marketing. In 2014, CT Jiangsu produced 103.75 billion cigarettes through exclusive opera- tions and 18.55 billion in joint-ventures, with the sales of its competitive Suyan and Nanjing brands reaching 32.705 billion and 84.585 billion respec- tively. The same year, both brands continued to maintain their rankings among the top 15 brands in wholesale value. CT Jiangsu is also one of the small number of existing slim cigarette producers in China, with its slim products taking a leading status in production scale, varieties, pricing, stan- dards, etc. In 2014, the company generated a total of RMB45.975 billion in taxes and profits, with profits alone reaching a record RMB9.23 billion. Based in different parts of China, the 17 manufacturing enterprises and the 33 commercial enterprises are stepping up their efforts in each other's regions to grab market share in new lo- cal markets while maintaining supply of tobacco products to their local regions. Under the state monopoly system, both the production and mar- keting of tobacco products in China are limited. However, tobacco products are considered a type of commodity. Whenever tobacco products enter the marketplace, they are sure to meet with stiff competition. Such competition among the best brands and products will lead to some becoming more and more powerful, while others naturally falling by the wayside. Throughout this process, tobacco products, as a special type of commodity, will stand the test of markets. It is possible that a day will come when cigarette sales in China be- come more open and more direct, and that will be a time of true marketization of the tobacco trade in the People's Republic, with cigarette products regaining to their previous status as a general com- modity. But in the meantime, they are still consid- ered a special type of commodity and that is not about to change. Shanghai Tobacco Group

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