Hongta Group Meets on Development of Competitive Brands, Markets

11/15/2005

Hongta Group in Yuxi City of southwest China's Yunnan Province - the largest Chinese tobacco manufacturer - held a symposium on the development of competitive cigarette brands and markets on October 10, with discussions focused on the status quo of Hongta Group and the marketing prospects of such competitive brands as Mount Hongtashan, Hongmei and Yuxi in 36 key Chinese cities. At the meeting, representatives of the commercial sector of the tobacco industry of Yunnan put forward specific opinions on how to support the development of big commercial enterprises and develop big competitive cigarette brands. In an address to the meeting, Hongta Group Board of Directors Chairman and President Liu Wandong recalled that thanks to a great change in guiding ideology, Hongta Group has been in a revival since 2003 and has realized enhancement of its comprehensive strength. Hongta Group is now at a very crucial point of readjustment, facing both opportunities and challenges brought about by the structural reform of the tobacco industry, Liu said. In accordance with the reform policy of the State Tobacco Monopoly Administration (STMA), and under the leadership Yunnan Provincial China Tobacco Industry Corporation, Hongta Group has taken steps over recent years to deepen its internal structural and systemic reform; has acquired three local cigarette factories; has formulated the strategy of greatly developing the three leading cigarette brands of Yuxi, Mount Hongtashan and Hongmei; and has set the target of striving to meet the demand of consumers at all levels by developing high, medium- and low-grade cigarette products of the three leading brands with different prices, according to Liu. Liu said that Hongta Group has defined four other brands - Guobin, Meideng, Ashima and Gonghexinxi - as support brands. Namely, to maintain the existing market shares, Hongta Group needs to keep several support brands to make up for shortfalls of market supply of the three leading brands, which will contribute to protecting and supporting the development of the three leading brands, and promoting the structural reform of the group's cigarette brands in a systematic way. On targets for the development of the core brand of Mount Hongtashan, Liu said that Hongta Group has chosen to focus its energy on mainly developing Mount Hongtashan brand cigarettes priced at seven yuan to 20 yuan (86 U.S. cents to 2.5 U.S. dollars) per packet, in striving to turn it into a first choice for mainstream male smokers in China and also a representative brand of Chinese-style cigarettes. Hongta Group now has a three-point plan for the development of Mount Hongtashan cigarette brand - firstly, to stabilize the production and marketing of basic products priced at seven yuan (86 U.S. dollars) per packet; secondly, to strengthen the development of leading products priced at 10 yuan (1.25 U.S. dollars) per packet, including development of the Mount Hongtashan New Force as a new competitive brand; and thirdly, to improve the quality of representative products priced at 15 yuan to 20 yuan (1.85 U.S. dollars to 2.5 U.S. dollars) per packet, including Mount Hongtashan (New Realm) and Mount Hongtashan (Renweifeng). On the development of the Yuxi brand, Liu said that Hongta Group has particularly formulated a plan for the development of this brand as a leading part of the work of research and development as well as marketing of brands, which is intended to ensure centralized and effective distribution of resources, and greatly promote the status and competitiveness of the Yuxi brand. In the development of the Yuxi brand in the near future, Hongta Group will mainly present to the market the 15mg 84mm hinge-lid Yuxi, the carton-packaged Yuxi, the Harmonious Yuxi and the Realm Yuxi, in order to meet the different demands of high-level consumers. Since the beginning of 2005, Hongta Group has been giving top priority to the development and marketing of Mount Hongtashan, in striving to restore the market sales of its big competitive brands. In doing so, it has successively developed such members of the Mount Hongtashan brand family as Mount Hongtashan New Force, Mount Hongtashan (Renweifeng), Mount Hongtashan (New Realm) and Classic Mount Hongtashan with choicest raw materials and improved blending formulas. Meanwhile, Hongta Group has managed to strengthen the research, development and application of core production technologies possessed by itself, increase the cultural meaning of the Mount Hongtashan brand, and turn Mount Hongtashan into a powerful cigarette brand. As a result, the sales of Mount Hongtashan in the first 10 months of 2005 revived on a full scale, outdoing its sales in the same period of 2004, following consecutive years of decline. Speaking on the same occasion, STMA Deputy Director-General He Zehua said that Hongta Group has entered a new stage of development following its success in structural reform over the past few years. "Any reform needs a process. The structural reform of manufacturing enterprises needs a relatively long period of time. We are hoping that commercial enterprises of the tobacco industry will be confident in Hongta Group. In the support of big manufacturing enterprises like Hongta Group, the core of a new type of relationship between the manufacturing and commercial sectors of the tobacco industry - interaction and mutual confidence - should be brought into full play," He said. The symposium was held on the sidelines of a national conference on inter-provincial cigarette trade for delivery in the first half of 2006. Enditem