Quick Insight of the China National Tobacco Corporation

The China National Tobacco Corporation (CNTC), which effectively holds a national monopoly on cigarette sales, has reported a net income of $21 billion dollars in 2012. China is the world’s biggest market for cigarettes, and it has reach this year 300 million of smokers, nearly 3 times as many as those in the next biggest smoking nation, such as India. In 2012, the tobacco market’s revenues have reached $122 billion, up from $47 billion in 2005. Despite tobacco control efforts by the Chinese government, Tobacco industry analysts foresee a growth within the Chinese market in both volume and value of the cigarettes sold. Even if the Chinese tobacco market has been registering low growth in sales volume, but healthy growth in sales value.

China has the intention to reach the international market and with this willing. Currently, less than one percent produced by the CNTC is exported each year. To reinforce its sales abroad, CNTC has to create strategic partnerships with other tobacco big groups, a collaboration that is profitable on both sides. Indeed, the big traded company will have the opportunity to grow their within within China thanks to the CNTC shares. Those big groups includes Japan Tobacco International (JTI), Philip Morris International (PMI), British American Tobacco (BAT), and Imperial Tobacco. This presence will allow CNTC to reach the emerging markets such as Eastern Europe and Latin america. This represent a great advantage and opportunity among the foreign groups, but the market remain limited and China is controlling the production and the domestic production and imports of foreign brands.

As the world’s biggest market for cigarette sales, the CNTC has the objective to become the key tobacco market players in the world by facing a lot of important challenge such as the health concerns, the slowdown of China economy. With a saturated market it is important to have a strong strategy and a better understanding of this specific market, in order to gain some market shares.

Chris Yao

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