Big Tobacco Manufacturers vie to Become top Cigar Maker in China

Source from:  cqnews.net 06/13/2007

Sichuan-Chongqing Regional China Tobacco Industry Corporation in southwest China's tobacco-producing Sichuan Province and Chongqing City and Wuhan Tobacco Group in central China's Hubei Province - both big Chinese tobacco manufacturing enterprise groups - are vying with each other for the position of China's No. 1 cigar maker. Recently, Sichuan-Chongqing Regional China Tobacco Industry Corporation declared a plan to develop "China's No. 1 cigar brand" while Wuhan Tobacco Group has also unveiled an ambitious plan to build a cigar production line "that is expected to become the largest in China or even in the whole of Asia." Under the plan to develop "China's No. 1 cigar brand", Sichuan-Chongqing Regional China Tobacco Industry Corporation will invest over 300 million yuan (over 37.5 million U.S. dollars) in the 2006-2010 five-year period in developing a project of technical transformation of its existing cigar making facilities to significantly enlarge its annual cigar production capacity, which it says will be unprecedented in the history of China's tobacco industry, targeting consumers of high- and medium-grade cigar products. So far, nearly 200 million yuan (25 million U.S. dollars) of the total investment for technical transformation has been approved, and part of the project of technical transformation has been started. When the project is fulfilled, the annual cigar output of Sichuan-Chongqing Regional China Tobacco Industry Corporation is expected to significantly rise. Meanwhile, Wuhan Tobacco Group has been busy in significantly enlarging its cigar production capacity. "We are planning to build a largest cigar production line in China or even in the whole of Asia," a top leader of Wuhan Tobacco Group told Chinese news media recently. In 2005, Wuhan Tobacco Group imported production equipment from the Netherlands to produce mini cigars. Recently, Wuhan Tobacco Group has invested 50 million yuan (6.25 million U.S. dollars) in installing a cigar production line that meets the relevant advanced international technical standards. With the installation of this production line, Wuhan Tobacco Group will become capable of annually producing 20 million cigars and generating 300 million yuan (37.5 million U.S. dollars) in business income from cigar production in five years. Both Sichuan-Chongqing Regional China Tobacco Industry Corporation and Wuhan Tobacco Group are aware that cigar sales has kept going up in China over recent years. For Sichuan-Chongqing Regional China Tobacco Industry Corporation, its cigar sales volumes in 2004, 2005 and 2006 were respectively 150 million, 280 million and 306 million. Along with the strengthening of efforts to promote sales, the corporation is expected to earn 10 million yuan (1.25 million U.S. dollars) from cigar sales from the market of Chongqing City alone in 2007. Sichuan-Chongqing Regional China Tobacco Industry Corporation describes itself as the largest cigar maker in China so far. The corporation's cigar making subsidiary in Shifang City of Sichuan Province has a cigar production history of nearly 100 years, with its annual cigar sales volume accounting for over 80 percent of the national total. For Wuhan Tobacco Group, it started all-round cooperation with British American Tobacco in 2004, introducing from it advanced management models and production technology. Today, the economically powerful Wuhan Tobacco Group is actively taking steps to develop international markets. According to sources with Sichuan-Chongqing Regional China Tobacco Industry Corporation, the corporation acted before Wuhan Tobacco Group in introducing a system of designing and producing cigars in accordance with specific requirements of customers, particularly the elite or upper class in Chongqing City. Under this system, customers can require the cigar maker to have their names printed on the rod, label, tearing tapes and packaging of cigars. Presently, there are four major cigar making enterprises in China. Before China's entry into the World Trade Organization (WTO) in 2001, fifty-five percent of the cigars on markets in China were imported. Since the WTO accession, the cigar making business has developed rapidly in China. On markets in China today, imported cigars are each priced at 100 yuan to 300 yuan (12.5 U.S. dollars to 37.5 U.S. dollars) while homemade ones each dozens of yuan (several U.S. dollars). Enditem