[Intl-tobacco] Cigarette Import Expected to Increase After China's WTO Entry

[Robert Weissman]

Cigarette Import Expected to Increase After China's WTO Entry

by 
CHINA;
Source: Tobacco China, 2001-12-10The import of cigarettes in China
is expected to increase after China's entry into the World Trade
Organization (WTO) in November.

However, the import of cigarettes in China will meet two major
obstacles - firstly Chinese smokers' general favor of non-blend-type
cigarettes, and secondly rapid improvement of the quality of
homemade cigarettes.

Although the consumption of blend-type cigarettes in China is
expected to increase, the market of blend-type cigarettes in China
might be relatively small for a period of time. As most of the
imported cigarettes are of the blend-type, the demand for blend-type
cigarettes might make the import of cigarettes disproportionate.

Over recent years, the quality of cigarettes made in China has kept
going up. This is because Chinese producers have generally upgraded
their processing technology and an increasing number of foreign
tobacco companies have established joint-venture enterprises in
China to produce cigarettes.

According to Customs statistics, cigarette imports in China totaled
12.8 billion cigarettes, up 72 percent over 1999. Meanwhile,
official statistics show that as compared with the consumption of
homemade cigarettes, the consumption of imported cigarettes in China
actually declined in the 1990s.

Sources with the tobacco industry have attributed the decline to the
following four major factors:

Firstly, the quality of homemade cigarettes has kept going up since
the 1990s. One side effect brought about by this quality improvement
is that the quality of homemade counterfeit cigarettes has also gone
up, and such counterfeit cigarettes have actually substituted for
certain imported cigarettes.

Secondly, although blend-type cigarettes have gradually become
welcome in China, Chinese smokers still generally favor traditional
non-blend-type cigarettes.

Thirdly, although China has lowered its tariff rates, the price
difference between homemade and imported cigarettes remains large,
with the price of a best-selling foreign brand higher than its
corresponding Chinese brand by an average of four yuan (about half a
U.S. dollar) per packet.

Fourthly, as far as the production and sales of high-priced
cigarettes are concerned, more and more Chinese producers are making
"luxurious" brands. Although highly priced, such cigarette brands
make good gifts and can be used to demonstrate the social status of
their consumers, and are therefore well received. They include
various types of very luxuriously packaged cigarettes, using golden
leaves and superior packaging paper, which are unmatchable by
typical imported brands.

Viewed from a long-term perspective, the import of cigarettes in
China may go up. China's entry into the WTO will enable Chinese
smokers to have more chances to consume foreign cigarettes, and will
become increasingly interested in blend-type cigarettes with low tar
content.

Meanwhile, the reduction of trade barriers against the legal import
of foreign goods will result in the legalization of the previously
illegal trade of some goods, which may be indicated in official
statistics as increased trade. Enditem

SOURCE FROM: http://news.swww.com.cn