<strong>China: STMA Issues Scheme for Market-oriented Reform of Cigarette Sales</strong>

Source from:  Eastobacco.com  03/24/2014

The State Tobacco Monopoly Administration (STMA) – the regulator of China's tobacco industry – issued on March 17 a scheme for launching pilot projects of reform for steady and orderly promotion of marketization of cigarette sales in Beijing City, Tianjin City and Hebei Province in north China.

The scheme points that the in promoting reform leading to marketization of cigarette sales, the tobacco industry shall adhere to the system of State tobacco monopoly; stand firm for reform leading to marketization; abide by the policy of "control over the total quantity and moderately tightening of balance"; establish a unified and open modern cigarette marketing system with orderly competition, with satisfaction of consumer demand as the core, with reform of the way of collection of cigarette orders as a ground, and with optimization of work flows, improvement of rules and strengthening of regulation as a priority; bring into play the important role of markets in the distribution of cigarette marketing resources; further arouse the vigor and vitality of enterprises for innovation; tap potential for market development; enhance the market control capacity; and promote systemic transformation and upgrading of the cigarette marketing patterns, to release bonuses of reform of the tobacco industry.

The scheme puts forward a package of targets for the work of operating pilot projects of the reform:

Firstly, further promotion of the extent of marketization of cigarette sales: Efforts shall be made to protect the independent choice of consumers and protect independent operation by cigarette retailers.

Secondly, further increase of pressure on competition among tobacco manufacturing enterprises: Efforts shall be made to develop a better market environment, and sharpen the competitiveness of tobacco manufacturing enterprises, to promote fair competition among cigarette brands and to have survival of the fittest. Through market forces, the will of tobacco manufacturing enterprises to enter into cooperation in production and further realize association among them shall be obviously enhanced.

And thirdly, further improvement of the cigarette production and marketing order: Efforts shall be made to maintain balance between the total quantity of supply and demand, with basic realization of marketability of products, with price increases amid stability, with rational maintenance of inventories, and with protection of the interests of retailers. Efforts shall also be made to prompt rapid development of advantaged priority key cigarette brands.

The STMA will establish a leadership group to take charge of the work of leading, organizing and coordinating the operation of pilot projects of the reform. The leadership group will be led by a deputy director-general of the STMA specifically in charge, and will comprise the relevant departments of the STMA. The general office of the leadership group will be based in China National Cigarette Sales Corporation. Enditem