Tobacco Asia

Volume 19, Number 5

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Page 42 of 71

tobaccoasia 43 "two integrations and two unifications" are both intended to further optimize the distribution of resources in the interest of realizing sustainable, healthy, and steady development. Today, YHGC is mainly responsible for the operation and management of non-tobacco op- erations and equities owned by CTYI, including those in the financial sector, the real estate sec- tor, the energy industry, and the hotel industry. It is under obligation to keep and increase the value of CTYI's non-tobacco assets. After the integra- tion is complete, YHCG will be in possession of RMB85 billion (US$13.5 billion) in total assets, in- cluding RMB64.3 billion in net assets. After it completed the integration of non- tobacco operations of CTYI, YHCG announced that it would, in accordance with the requirement of the principle of "giving priority to capital man- agement" outlined in the Guiding Opinions, and with "capitalization of assets and securitization of capital" as an orientation, implement effective integration between production and financing, make good use of its existing assets, increase the value of its assets, strengthen its financial sector, develop its support sectors, consolidate its basic sectors, stabilize the development of its hotel and real estate operations, and participate in invest- ment into national strategic emerging industries in an appropriate and timely manner, in order to gradually transform from a comprehensive invest- ment company into a financial holding group, and enhance the core competitiveness of CTYI. The smooth completion of the integration process has contributed to laying a solid foundation for stan- dardization of the management and operation of CTYI and increasing the efficiency of its capital operation. The 12-year course of development of CTCI is the epitome of modern development of the tobacco business China. Its separation into two independent entities is a momentous decision to meet the new trend of development. The merger of YTG into YHGC is of landmark significance to the tobacco industry as it tries to vigorously pro- mote investment in non-tobacco operations and realize value keeping and appreciation of state- owned assets. The separation and merger of ex- isting tobacco manufacturing enterprises both re- flect the endeavor to further deepen the reform of its state-run enterprises and accelerate its reform at a higher level. It is part of a bold drive by the to- bacco industry to promote a major transformation of the management of its assets and other resourc- es, and, even more significantly, self-improvement of its corporate operation model and the manage- ment.

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