Key Cigarette Factory Strengthens Development of Medium-, Low-Grade Cigarettes

Source from:  Straits Tobacco newspaper 03/22/2005

Xiamen Cigarette Factory in southeast China's Fujian Province – one of the 36 key Chinese tobacco manufacturers designated by the State Tobacco Monopoly Administration (STMA) – is taking steps to strengthen the development of medium- and low-grade cigarette products to meet the growing market demand in China. While stabilizing and well operating the production of high-grade members of its famous Shishi brand family, Xiamen Cigarette Factory will develop two new Grade-Three members of Shishi with a retail price of 30 yuan and 40 yuan (3.6 U.S. dollars to 4.8 U.S. dollars) per carton respectively, according to a recent announcement by Fujian Provincial China Tobacco Industry Corporation, which is responsible for overseeing the operation of the tobacco manufacturing enterprises in the province. The development signifies that Shishi – a longtime famous and high-quality cigarette brand, will have low-grade members in its family designed to meet the demand of lower income earners in China. In 2001, the Chinese government reformed the consumption tax system in the country, which has benefited high-grade cigarette producers while greatly increasing the burden of consumption tax on low-grade cigarette producers. As many traditional low-grade cigarette producers shifted to the production of higher-grade products, low-grade cigarettes on Chinese markets have often fallen short of demand. The move of Xiamen Cigarette Factory to strengthen the development of medium- and low-grade cigarettes has been viewed by sources with the tobacco industry of China as a signal of a large-scale reform of the structure of cigarette brands by Fujian Provincial China Tobacco Industry Corporation. Fujian Provincial China Tobacco Industry Corporation expects Shishi to show good performance at the marketplace of medium- and low-grade cigarettes, in the interest of redressing the problem of somewhat orderless competition among medium- and low-grade cigarette brands on markets in Fujian. Enditem