Chinese Cigar Maker Successful, Eyes Higher Targets

Source from:  Bengbu City 03/28/2005

The cigar production subsidiary to Bengbu Cigarette Factory in east China's Anhui Province, which has emerged as a big Chinese cigar maker over recent years, is planning to significantly strengthen both its domestic and international operations on the basis of great business successes already scored in the past few years. Bengbu Cigarette Factory is one of the 36 key Chinese tobacco manufacturers designated by the State Tobacco Monopoly Administration (STMA). Its cigar production subsidiary has been successful in both the domestic and international operations over recent years. In particular, its hand-made Wangguan (Crown) brand and Huangshansong (Mount Huangshan Pine) brand cigars have become famous-brand, high-quality cigars in China, and are well sold to more than 60 large or medium-size cities in some one-third of China. In a business development plan unveiled in the beginning of 2005, the cigar production subsidiary set a package of targets for strengthening its production, operation and management on a full scale while managing to improve the quality of its existing competitive brands, in efforts to realize rapid growth. [b]MAINTENANCE OF EXISTING BRANDS, DEVELOPMENT OF NEW PRODUCTS[/b] Wangguan, Huangshansong, Weimeisi and other cigar brands of the cigar production subsidiary are well-known popular cigar brands favored by Chinese cigar consumers. Whenever homemade cigars are mentioned, they will think of these brands. The cigar production subsidiary is of relatively sophisticated hand-making technology. For years, the cigar production subsidiary has enjoyed good sales and stable marketing. In particular, the supply of cigars manufactured by it has often fallen short of market demand. The subsidiary has to work extra time to fill the shortfall, making its daily output exceed 200,000 cigars. The development of Wangguan is the result of successful cooperation in a joint-venture project between the cigar production subsidiary and Dominica for three years. Under the project, all the leading technicians concerned received professional training on cigar-making technology from Dominica for the whole process of manufacture. On the basis of its own traditional cigar-making technology, the subsidiary has absorbed advanced foreign cigar-making technology, and is now capable of producing cigars with quality close to meeting the relevant international technical standards. Today, high-quality full-leaf cigars manufactured by the cigar production subsidiary are all made with high-quality leaf tobacco imported from Indonesia or Brazil, with workers manually removing stems from the leaf and tearing the leaf for making the core of cigars. The size of leaf, the weight of cigars, the forming of cigars, the control of humidity and temperatures, the alcoholization of leaf, the cycle of cigar production, etc are all in compliance with strict international technical standards for cigarette manufacture. The packaging of cigars is in the form of beautiful-looking aluminum cans or antique-like redwood boxes, well favored by consumers for collection and gift making. On the basis of maintaining and improving the quality of existing brands, the cigar production subsidiary has since the beginning of 2005 taken advantage of its strong technical force to boldly conduct technical innovations intended to improve the appearance designing and the inherent quality of cigars. In doing so, it has developed the 136mm, 88mm and 86mm serial half-leaf cigar products of the Wangguan brand family. The development of the three new products has contributed to filling a domestic gap of medium-grade cigar production and supply, with vast marketing potential. The batch production of the three new products has been approved by Anhui Provincial Tobacco Monopoly Administration. Besides, the subsidiary has gained STMA approval to promote the sales of the three new products through the Intranet of China's tobacco industry. [b]MARKET DEVELOPMENT[/b] Over recent years, cigar consumption has been in an upsurge in a number of countries, particularly developed countries in Europe and America, which has also impacted tobacco consumption in China. Along with advancement of the process of global economic integration and continued improvement of living standards in China, Chinese tobacco consumers have become more and more acceptant to the cigar culture. In such large Chinese cities as Shanghai, Beijing, Shenyang, Guangzhou, Shenzhen and Xi'an, there have occurred "cigar cafes" or "cigar bars" on the streets. Some people take the consumption of cigars as something fashionable. Over recent years, the cigar production subsidiary has succeeded in developing a well-established marketing network and winning greater confidence from consumers. Under such a favorable situation, it sticks to the policy of developing new products and markets with great sincerity and reliability. Since the beginning of 2005, the cigar production subsidiary has been eyeing mature markets in Beijing, northeast China and northwest China, succeeding in developing one new market after another. It has consecutively developed regional markets in Ningxia Region and Shaanxi Province in northwest China, Heilongjiang Province in northeast China, Guangxi Region in southwest China and Shandong Province in east China. While managing to maintain its existing market shares in Bengbu, Hefei, Huainan, Suzhou, Fuyang, Bozhou, Ma'anshan Cities, etc in Anhui Province, the cigar production subsidiary is taking steps to develop more markets in other cities in the province including Huaibei, Wuhu and Anqing in a stable way. So far, cigar products manufactured by the cigar production subsidiary have been well sold to more than 60 large or medium-size cities in more than a dozen Chinese provinces, autonomous regions and provincial-level municipalities covering some one-third of China. In particular, its annual cigar sales volume accounts for some 70 percent of the total cigar trade volume in China. [b]U.S. SALES[/b] After recommendation by China Tobacco Henan Provincial Import-Export Corporation, a U.S. company, known as Caiteng International in Chinese, contacted the cigar production subsidiary for exporting cigars to U.S. markets. The U.S. company sent a team to Bengbu to conduct on-site inspection of cigar production at the subsidiary, and took back some of its sample products for trial sale at a pan-American annual expo in Las Vegas in southeast Nevada. As a result, the sample products were well received by American dealers. After test-smoking and appraisal, they became interested in products of the cigar production subsidiary, saying that the products could meet the demand of American consumers with its strong aroma, mild flavor and specification. The U.S. company ordered 600,000 half-leaf cigars from the subsidiary under the trademark of Crazy Horse, with four different flavors, which were all converted on the basis of 73mm Wangguan cigars. On December 30, 2004, the first batch of 600,000 pieces of 73mm cigars was exported to the United States, contributing to filling a gap in China's sale of tobacco products to the U.S. market. Besides, the U.S. company has expressed the intention of signing an agreement with the subsidiary on the export of an extra 10 million half-leaf cigars. Enditem