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Marketing research: retail for Cigarettes in China

China is the biggest cigarette consuming country in the world. Now, there are 356 million smokers in China, which is 27% of the world’s total smoker population. It has been estimated that the number of smokers will still remain over 300 million in year 2025, thus China’s consumption of cigarettes will still remain at a high level in the future 10 to 20 years.

Since year 1982, China has exerted much regulation on cigarette retailing. In 1982, China Tobacco was founded, and since then cigarettes has been a government monopoly.

In China, there are now some famous and competitive big enterprises like Yuxi(玉溪) Cigarette Factory, Shanghai(上海) Cigarette Factory and Changsha(长沙) Cigarette Factory which has now been equipped with world first class technology.

Since China has relatively strict restrictions on tobacco importing and exporting, China’s cigarette market seldom relies on international trade, and nearly all its development has been achieved through retail in China.

Now the average cigarette consumption among Chinese smokers is 13.91 cigarettes per day, which is 15.1% of their monthly income. 37.9% smokers in China have 10 to 19 cigarettes per day.

China’s domestic cigarettes are mostly flue-cured, like Hongtashan(红塔山), Yunyan(云烟),Zhonghua(中华),Furongwang(芙蓉王) and Baisha(白沙). Also there are hybrid types of cigarettes like 555, Malboro(万宝路), Zhonghanhai(中南海) and Yangcheng(羊城).

The main form of cigarette marketing is retailing. Usually people can buy cigarettes from specialized cigarette wholesale shops, malls, convenience stores, supermarkets, and luxury stores.

In China, there is now a relatively complete cigarette retailing regulation system. On the box of cigarettes there is a unique identification code printed. This is the code of the shop’s license for cigarette selling. Cigarettes bought from shops with the license are guaranteed to be genuine, and if these two codes do not match, they might have been cheated.

During recent months in 2012, the retailing prices for cigarettes of a few brands have been raised. The price is set by China Tobacco according to the geographic position, consumer types and business circle types.

Now, according to industry insiders, Chinese domestic brands still have comparative advantage in the long run. With the help of the cigarette wholesale system and the inner innovations in this industry, cigarette market has great space of development in China, and even, hopefully, in the world.

Edited by Amy Wang from Daxue Consultant China

Credit Photo: Eastmv