The China National Tobacco Monopoly largely holds a monopoly over tobacco sales throughout China generating about seven to ten percent of government revenue. In terms of the global market, China Tobacco is the largest tobacco company manufacturing a total of 2.5 trillion cigarettes in 2013 compared to their closest rival Phillips Morris international who only made 880 billion cigarettes. Yet, constant smokers will notice that China Tobacco’s brand of cigarettes are rarely found outside of China (Malboro is actually the most popular brand in the world) so China Tobacco relies mainly on domestic sales than international sales. Not surprising due to the size of China and, as Hessler describes, the importance of cigarettes as a social status symbol so China tobacco owns a steady and constant demand. Yet, this monopoly and immense revenue generated by China tobacco means the government will do what they can to maintain this revenue flow.
To prevent any rivals from appearing inside China, the government created laws making importation of Western cigarettes very difficult. Provisional governments set up literal “ring fences” in order to prevent cross-province tobacco sales creating a smaller local monopoly on certain cigarettes though today Chinese Tobacco has essentially merged 123 cigarette manufacturers to 30 total. These thirty factories are under control of The State Tobacco Monopoly Administration, who runs regulations and puts cigarette quotas on factories. Although “separate” entities, the administration and China Tobacco work very closely with each other even having the headquarters in the same location.
This monopoly will inevitable create conflict far past the tobacco market. Black markets appear to sell other brands regulated and difficult to obtain. Smuggling across province and country lines constantly occur. In 2015, the Chinese government arrested 41 people under the suspicion of an illegal underground cigarette market. The Wor
ld Health Organization has begun pressuring China to implement anti-smoking measures due to the amount the Chinese smoke per year; one in three cigarettes smoked is in China.
Many obvious problems could appear for China’s tobacco market. Already, we can see the monopoly having averse affects on the tobacco market itself causing an entire black market to appear. China’s tobacco also has almost no global presence whatsoever. Will it be worth it for the government to lose out on this massive source of revenue for them? In addition, what reasons do they have to cave into international pressure to curb smoking in China?