China's Tobacco Industry Generates More Taxes, Profits in January-June

Source from:  xinhuanet.com 07/16/2007

The tobacco industry of China maintained a favorable trend of steady development in the first half of 2007, generating over 200 billion yuan (26 billion U.S. dollars) in manufacturing and commercial taxes and profits, a sharp increase of 26 percent over the same period of 2006. Speaking at a press conference in Beijing on July 12, Zhang Xiulian, spokesman for the State Tobacco Monopoly Administration (STMA), said that in the first six months, tobacco monopoly administrative authorities across China signed 2.85 million contracts for tobacco growing and supply with local farmers; that the acreage of tobacco-growing farmland in China reached 15.34 million mu (1.02 million hectares); and that the leaf tobacco purchase quotas approved by the State under contracts signed with local farmers in 2007 were 41.7 million dan (2.085 million tons). Zhang explained that the tobacco industry is expected to fulfill the leaf tobacco purchase quotas approved by the State by the end of the year, and said that tobacco production in China can remain stable in 2007 for the 10th consecutive year. As far as the development of key competitive cigarette brands by China's tobacco industry is concerned, Zhang said that in the January-June period, 14 big Chinese cigarette brands saw their biannual output increasing to 500,000 cases (25 billion cigarettes). The spokesman said that in the six-month period, the tobacco industry was successful in structural reform leading to the adoption of the corporate system, with 12 provincial-level China Tobacco Industry Corporations across China completing the reorganization of their subordinate cigarette-making enterprises through merger or acquisition. He said that the tobacco industry was also successful in reforming its marketing system in the six-month period, stripping 32 county-level tobacco companies of their independent corporate status. So far, 1,574 county-level tobacco companies across China have been stripped of their independent corporate status in the ongoing structural reform. From January to June, the tobacco industry of China took steps to strengthen the management of enterprises and strictly control their cost of production, contributing to steadily improving the quality of their economic operation. In the six-month period, the manufacturing sector of the tobacco industry saw its cost rate of sales income declining to 32.6 percent and expense rate of operation, management and accounting declining to 7.9 percent, respectively down 2.4 percent and 1.3 percent from the same period of 2006. For the commercial sector of the tobacco industry, it saw its expense cost of operation, management and accounting in the six-month period declining to 7.1 percent, down 1.2 percent year-on-year. From January to June, Chinese law enforcement authorities brought to light 2,441 cases of making or selling cigarettes with counterfeit trademarks each involving 50,000 yuan (6,580 U.S. dollars) or more in value, and seized 4.12 billion fake cigarettes in carrying out inspections at the marketplace. In the six-month period, they also raided and destroyed 1,557 illegal factories making fake cigarettes, seizing 313 sets of tobacco machinery and 14,000 tons of leaf tobacco for making fake cigarettes, and detaining 2,995 people suspected of making or selling fake cigarettes. Eventually, 1,160 of them were given prison terms. Enditem