1.1 China’s state tobacco monopoly system
China’s tobacco industry adopts a system of unified leadership, vertical management and monopolized operation. The STMA and CNTC are responsible for centralized management of staff, finance, properties, products, supply, distribution, and domestic and foreign trade of the country’s tobacco industry.
The CNTC was founded in January 1982. The State Council issued the ‘Rules on Tobacco Monopoly’ in September 1983, setting forth the national tobacco monopoly system officially. The STMA was established in January 1984. The Standing Committee of the National People’s Congress approved the ‘Law of the People’s Republic of China on Tobacco Monopoly’ in June 1991. The State Council issued the ‘Rules for Implementation of the Law of the People’s Republic of China on Tobacco Monopoly’ in July 1997. The issuance and implementation of these laws and regulations further enhanced and improved the national tobacco monopoly system. Currently, the industry covers 33 provincial tobacco monopoly administrations and companies, 30 industrial enterprises, over 1,000 commercial enterprises. The structure of the China’s tobacco monopoly system is illustrated in figure 1.
The CNTC is responsible for enforcing the tobacco monopoly, while the STMA manages the monopoly. The CNTC is responsible, under the close supervision of the STMA, for marketing, production, distribution, and sales of all tobacco products by applying the nationwide Allocation Plan.
1.2 Tobacco production, consumption and market
China is the largest country in both tobacco consumption and tobacco production. It produces and consumes one-third of the world’s cigarettes. The CNTC caters to its customer base of 350 million smokers, who consume 1.7 trillion individual cigarettes every year. Currently there are about 31 cigarettes manufactories which produce 155 brands of cigarettes in China. In 2008, China produced 2,205,900 million individual cigarettes, sold 2,195,737 million individual cigarettes, and contributed 449.941 billion RMB tobacco taxes and profits which accounted for about 8% of government’s fiscal income. Table 1 shows cigarette production and consumption in the past 10 years which indicates that cigarette production has been steadily increasing along with cigarette consumption and both cigarette imports and exports have been stable and account for a very small share.
Central University of Finance and Economics