New Form Of Sichuan And Chongqing Tobacco Development Strategy

In recent years, China Tobacco enjoys a rapid development. The total taxes and profits of the tobacco industry leaps from 105 billion Yuan in 2000 to 513.1 billion Yuan in 2009. It can be thought that tobacco industry is the "cow" to China's treasury, the important support to China's tax revenue and the main source of local revenue.After China joining WTO, China tobacco has to face a bigger challenge. In the case of some countries weak on tobacco industry in Europe, there is a drop as much as 70% in their market share after opening their tobacco market. If china tobacco falls in the same case, there will be a tax drop by 350 billion Yuan every year. In order to avoid such a big loss, China tobacco adopts various means from 2000, taking measures of separating industry and commerce, order availability, merging and reorganizing enterprises, etc., the result of which is a big development both in the tobacco industry and brand. On the recent basis, China's State Tobacco Monopoly Authority put forward a new target by the end of 2009 about enlarging enterprise and brand, aiming to realize the target of "532" and "461" by the end of 2015. (We will try to establish 10 tobacco brands which sales volume reach to 10 million packing-cases per year, and create 12 tobacco brands of each sales amounts more than 40 billion Yuan per year. Among them,4 brands of more than 60 billion Yuan,2 of 100 billion Yuan.)This paper makes an attentive analysis on the target "532" and "461". On the basis of analyzing the developing situation of China tobacco, this paper expounds on the irrationality of "461" by analyzing lots of data and points that in 2015, if a brand is to exit, the sales income should reach 60 billion Yuan at least. The "461" should be replaced by "6115". After the analysis about some brands in the present market which has the possibility to enter "532" and "461", the writer puts forward the lowest target for China Tobacco Chuanyu Industrial Corporation(Chuanyu) to survive in 2015:the sales volume should be 2 million box and the sales income should be 60 billion Yuan at least.This paper draws a detailed analysis on the advantage, disadvantage, chance and threat Chuanyu has to face under the competition of "scale against scale, force against force, speed against speed". It points out that the biggest chance for Chuanyu lies on its large base market, high-structured brand which can be integrated and the possibility of raising high-structured products and enlarging "Jiaozi" brand. The threat it has to face lies on that the sales volume of high-class cigarette is too low and that the products expansion in other provinces comes into the bottleneck period. In the base market, the sales volume of high-class cigarette is too low, the result of which is that the structure of Chuanyu-owned brands steps up slowly and that the industrial profits and taxes in Sichuan tobacco market falls into the hand of Yuannan makers.From the angle of seizing the chance and avoiding the risk, this paper puts forward three main strategic investment directions:first, to unite with the government and quickly promote the sales volume of Chuanyu-owned high-class brands in Sichuan province, especially the high-class cigarette of "Jiaozi" series; second, to quickly integrate "Longfeng" series, "Tianzi" series and "Chaotianmen" series, enlarge the scale of "Jiaozi" series and strength the faith of business operating "Jiaozi" series to reduce the resistance of developing market in other provinces; third, to find a suitable way for Chuanyu to reform the advertisement means to gain a bigger market before advertisement forbidding from 2011. This paper advises that it is better for Chuanyu to do research on the new retailing publicizing system in advance. The main operation mode is by the means of coding packets and making use of fast-developing network technology to dodge policy risk and realize the function of locking up, making tracks of, repaying customers and raising the degree of customer satisfaction, etc.Under the circumstance of completing the predetermined target in 2015, Chuanyu calculates an amount of taxes and profits possibly provided by Sichuan government.The research result of this paper lies in the following aspects:it can help Chuanyu to change in thinking to speed up products integration and strengthen products competiveness; it can help Chuanyu to keep better public relations with the government and unite with tobacco business to raise the sales volume of high-class brands in the base market; it can help Chuanyu to bring forth new ideas of cigarette retailing advertising system. In addition, it makes a realistic reference for the government to draw up macro policy for tobacco industry. Under the situation of intended target has been accomplished in 2015, ChuanYu Industrial Corporation of China Tobacco has predict the taxes which Sichuan municipal government may levied. They believed that the target of 30 billion industrial taxes can be achieved in 2015, thus, the number may doubled on the basis of the 2009.