China: Yunnan Provincial Tobacco Industry Gets Good Report Card for 2006-2010

Source from:  TobaccoChina Online 01/30/2011

The tobacco industry of southwest China's Yunnan Province - the largest tobacco-producing region in China known as the kingdom of tobacco - got a good report card on its structural reform, development of competitive cigarette brands and generation of taxes and profits in the 2006-2010 five-year period, suggesting a continued favorable trend of development. According to data released at a provincial-level tobacco work symposium jointly held by the Communist Party Yunnan Provincial Committee and Yunnan Provincial Government in the provincial capital city of Kunming on January 26, the tobacco industry of Yunnan has since 2005 conducted two rounds of structural reform characterized with corporate merger and reorganization, leading to significant strengthening of competitiveness of its key cigarette brands, and greatly driving up the annual amount of taxes and profits. In 2010, the tobacco industry of Yunnan generated 68.5 billion yuan (787 million U.S. dollars) in taxes and profits, an increase of 25.3 billion yuan (378 million U.S. dollars), or 58.6 percent, over 2005. In the 2006-2010 five-year period, the tobacco industry of Yunnan succeeded in converting its four cigarette-making enterprises into three and then its three cigarette-making enterprises into two in the two rounds of structural reform, eventually establishing the new Hongta Group and the new HongyunHonghe Tobacco Group. In the structural reform, Yunnan Provincial China Tobacco Industry Corporation - the operator of the provincial tobacco industry - realized smooth progress in its systemic transformation, rectifying the relationship of management over assets of its manufacturing enterprises, establishing a three-layer system of parent-subsidiary companies, completing the transformation of its subordinate enterprises leading to the establishment of a modern corporate system, and establishing and improving its corporate governance structure. Through the structural reform, the provincial tobacco industry managed to rapidly concentrate its resources onto the production of its four key competitive cigarette brands, with the total number of its cigarette brands going down from 26 in 2005 to 13 in 2010, and with its annual single-case cigarette output in 2010 going up by 15 billion cigarettes (300,000 cases), or 1.3 times, over the level of 12 billion cigarettes (240,000 cases) in 2005. In 2010, the total sales volume of the four key cigarette brands of the tobacco industry of Yunnan reached 368.5 billion cigarettes (7.37 million cases), accounting for 76 percent of its aggregate cigarette output in the year. All the four ranked among the biggest cigarette brands of China's tobacco industry as a whole in terms of the annual sales volume and the annual amount of sales income. In 2010, the provincial tobacco industry managed to continue improving the structure of its cigarette brands, raising the proportion of its high- and medium-grade cigarette brands to 65 percent of the total, with the structural improvement playing a remarkable role in leading business development, and with its contribution to economic growth reaching 70 percent. In the 2006-2010 period, the tobacco industry of Yunnan realized year-on-year growth in taxes and profits for five consecutive years, with the amount of taxes and profits generated in 2010 alone reaching 68.5 billion yuan (11.23 billion U.S. dollars), a sharp increase of 25.3 billion yuan (3.78 billion U.S. dollars), or 58.6 percent, over 2005, with an annual average increase of 5 billion yuan (746 million U.S. dollars), or 11.7 percent, and with the single-case amount of taxes and profits going up by 3,965 yuan (592 U.S. dollars) over the level of 2005. Enditem