Recently in Beijing, representatives of the Chinese National Tobacco Corporation (CNTC) and Philip Morris signed an agreement on licensed production of Marlboro cigarettes in Chinese factories. The goal is to expand offering cigarettes online. Thus, Philip Morris became the fourth foreign manufacturer on the tobacco market in China.
The joint venture created by Philip Morris and CNTC, in addition to producing and selling cigarettes, will promote Chinese products to the world market. Thus, the headquarters of the new company, which will be located in Lausanne, Switzerland, will promote Chinese products and even fashionable clothes of Chinese designers.
China is very attractive to tobacco companies, but it is not easy for foreign producers to get there and promote cigarettes online. The number of smokers in the country exceeded 350 million, but local companies control 94% of the market. One of the first conquests of this market was taken up by the company Imperial Tobacco, which produces its West brand under license.
Gallaher, which started the licensed production of Memphis cigarettes, adheres to the same opinion about the Chinese market.
One of the main terms of the agreement between Gallaher and CNTC was Gallaher’s commitment to introduce a Chinese brand of cigarettes to a European market. In exchange for producing cigarettes in China, Memphis Gallaher began producing the Chinese brand Golden Deer.
Now Gallaher has brought the number of its brands on the Chinese shelves to three and also connects with this market great development prospects.
However, relations with Chinese officials in another tobacco giant, British American Tobacco, are not quite smooth. Recall that BAT announced its agreement with the Chinese government to build its factory in the country.
In addition to the volume of the Chinese tobacco product market, the fact that the restrictions on smoking itself and on cigarette advertising in China are very weak are also very important for manufacturers. True, it is still hard to compete with a local manufacturer, since Chinese cigarettes are cheaper, and their quality is at a fairly high level.
