Chinese tobacco consolidation will stub out 200 brands

Source from:  Business Report (za) Shanghai 11/11/2004

Chinese tobacco companies wanted to speed up industry restructuring in a bid to create big, widely recognised cigarette brands and to improve competitiveness against international rivals, the state-run China Daily said yesterday. After a meeting in southwest China last month, 26 Chinese cigarette makers tabled an outline plan that would lead to major industry and brand consolidation in the world's largest tobacco market, the newspaper reported. National administrators planned to establish 30 to 50 key enterprises through mergers and acquisitions over the next three years, closing smaller producers by the end of this year, it said. In a move to build stronger brands, more than 200 of China's 300 brands will be stubbed out. To compete with global giants such as Philip Morris, Japan Tobacco and British American Tobacco, the government has already ordered a series of consolidation measures for the country's fragmented industry. "The purpose is to break market barriers and beat the illegal marketing channels caused by differentiated prices," Sun Zezhi, the deputy general manager of the Sichuan Cigarette Selling, was quoted as saying. Enditem