As cigar consumption keeps growing as a result of rapid economic development and steady increase of disposable personal income over recent years, China has kicked off a project to build a new cigar making base in the southwestern part of the country, which will be the largest in Asia.
Under the planning of the State Tobacco Monopoly Administration (STMA) for the development of the cigar manufacturing, cigar production will be given priority in development in future, and China Tobacco Chuanyu Industrial Cop. (CTCIC) - the operator of the tobacco industries in southwest China's Sichuan Province and its neighboring Chongqing City - has been designated by STMA to build China's leading cigar making base.
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On July 12, 2008, a high-profile ceremony was held in Shifang City of Sichuan province to lay the cornerstone for the renovation and relocation of the Great Wall Cigar Factory(GWCF) under CTCIC. When completed, the new factory will become the largest cigar production center in Asia.
CTCIC will invest RMB800 million (US$115 million) in the new factory, which will be used to build it into a brand new production facility in accordance with the state's stringent technical standards.
When completed, the new factory will have an annual production capacity of 2 billion cigars by the year 2013, including 11.3 million high-grade cigars and 700 million medium-grade cigars, and it is expected to earn RMB1.3 billion in annual sales income, including RMB900 million in annual taxes and profits.
Presently, CTCIC ranks first in terms of annual cigar output, cigar market shares and the size of raw materials supply bases in China.
[b]Sales champion[/b]
The existing cigar manufacturing facility of CTCIC, GWCF is already the largest of its kind in China.
It is highly experienced in cigar production and boasts key production technologies. Its leading products, numbering among them such famous brands as Great Wall, Gongzi and The Lion, have taken considerable domestic cigar market shares. In 1986, GWCF achieved a breakthrough in production growth by becoming China's largest cigar making enterprise. Over more than 20 years, it has successfully maintained its status as the premier domestic cigar manufacturer. Its products are exported to Macao and other regions and to Russia, Egypt, Malaysia, Indonesia, the Philippines and elsewhere. Over recent years, Great Wall cigars have represented Chinesemade cigar products at many international expositions, wining the Damascus International Gold Medal and the Panama Silver Medal. In 2005, Great Wall was rated as the most influential cigar brand in China. The annual output of the Great Wall reached 300 million in 2005 and 321 million in 2006, enabling GWCF to lead all other domestic cigar making enterprises.
The annual cigar output and sales of CTCIC are well balanced, with an annual sales volume accounting for more than 80% of the domestic market share, the largest of all Chinese cigar manufacturers. CTCIC sold more than 150 million cigars in 2004to domestic markets, an increase of 21% over 2003, 280 million cigars in 2005, accounting for 83% of the total cigar sales volume in China that year, and 306 million cigars in 2006, still accounting for over 80% of the total domestic cigar sales. Presently, CTCIC cigars are available in 23 Chinese provinces or provinciallevel regions, including Sichuan, Beijing, Shanghai, Guizhou, Yunnan and Chongqing.
CTCIC has begun to adopt new ways of marketing cigars to ensure its cigars are better recognized by consumers. In 2006, the corporate marketing center introduced a 'one-onone' personalized service, under which orders are taken from individual customers and cigars are produced in accordance with the particular requirement specified in the orders. Both groups and individuals have availed of the service since its inception. Cigars are made exclusively in accordance with the personal requirements and demand of customers. Typically, the name of customer is printed on the rod, trademark and tear tape on the packing. Since its introduction in 2005, this special service has been gradually extended to more and more regions.
[b]High quality raw materials[/b]
As both the filler and wrapper of cigars are natural leaf tobacco, there are very stringent requirements in terms of the appearance, quality and the smoking flavor of leaf tobacco intended for cigar manufacturing. Ensuring a consistent supply of high-quality leaf tobacco is a prerequisite to producing high-quality cigars.
Over the past few years, CTCIC has strengthened its efforts to develop raw materials producing bases and has established China's largest cigarspecific sources in Shifang, Hainan and Tongxiang - the three most favorable zones for tobacco cultivation - with more than 5,000mu (333 hectares) under tobacco.
The corporation has gradually developed a series of measures for field management and mature technology for leaf tobacco preparation after harvest, and has established a complete system for the supply of leaf for high-quality cigar production. In an effort to meet production requirements, the corporation is planning to increase investment in its raw materials producing bases in the 2006-2010 fiveyear period. It is expected that the total under tobacco will have reached 10,000 mu by 2010.
In particular, high-quality leaf tobacco for making Great Wall cigars is grown in Shifang. The soil in 16 towns in Shifang, including Yunxi, Nanquan and Lianglukou, is all oil-sand soil, which is particularly favorable for the growing of leaf tobacco. Tobacco grown in Shifang has a coordinated and balanced chemical composition. Shifang has a history of producing sun-cured leaf tobacco going back over 300 years.
Shifang sun-cured leaf tobacco looks reddish and shiny and is mild and smooth in the mouth. It imparts a pure and aromatic smoking flavor. After the promulgation of the Regulations on State Tobacco Monopoly in 1981, Shifang sun-cured leaf tobacco was rated among the best in China. In February 2007, Shifang City was granted the title Cigar Making Land in China. Continuing efforts to improve the quality of leaf tobacco for producing high-quality cigars, CTCIC is planning to introduce high-quality leaf tobacco varieties and advanced leaf tobacco growing technologies from overseas.
[b]Cooperation with Agio[/b]
The new factory when completed will make CTCIC the largest cigar manufacturer in Asia. As a result, its Great Wall and Lion brands will gain powerful momentum for further development.
CTCIC has already started cooperation with foreign partners in efforts to further improve the quality of its products and ensure its continued business development success.
On September 16, 2008, CTCIC and Agio of the Netherlands officially signed an agreement of intent on technological cooperation in Beijing. With 104 in the business, Agio is mainly engaged in the production and marketing of cigars and the manufacturing of cigar-making equipment. Its products are exported to over 100 countries worldwide.
Under the agreement of intent, CTCIC and Agio will cooperate in the research and development of production technologies, cigar brands, raw materials, production equipment, and so on. Agio will provide technological consultation for the renovation and relocation of GWCF, extend full support to CTCIC in the acquisition of specialized equipment and assist it in developing and designing standard medium- and high-grade machine-made cigar products. CTCIC in return will participate in Agio's development of bases for producing cigar-specific high-quality leaf tobacco around the world. Enditem
