China attempting to crack down on cigarette marketing

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Another interesting story … the power of a world economic dynamo …telling Big Tobacco and trying to tell its own tobacco monopoly to “Piss off.”

China, the No. 1 tobacco consumer market in the world, yes, far, far beyond the U.S. (300 million Chinese smokers compared to 45 million Americans), is cracking down on cigarette marketing.

The Chinese government announced strict new rules about tobacco marketing this week. From now on, tobacco ads are banned in mass media, outdoors and public areas and transportation. I assume this means no tobacco ads on TV, on buses or cabs or on billboards.

What’s interesting about this move is that China has a monopoly on its tobacco market. Western Big Tobacco companies such as Imperial Tobacco and Philip Morris only control 1 percent to 2 percent of the market (I covered this years ago. Philip Morris, RJ Reynolds and Imperial Tobacco attempted to make serious inroads into China, but the Chinese weren’t stupid and rebuffed them. They realize there is too much money to be simply given away to non-Chinese corporations to allow that.). The rest of the market is controlled by a Chinese state agency. So you have one Chinese state agency more or less facing off against another.

Holy crap, according to this Reuters article, the Chinese tobacco administration control 7 percent to 10 percent of the revenue in China — as much as $127 billion a year (U.S.).

The whole thrust of this is to try and crack down on tobacco companies marketing to kids. So, China is facing some of the same marketing issues seen in the West during the past 50 or so years.

From the Reuters story:

In an interview, Liang Xiaofeng, deputy director of China’s Center for Disease Control and Prevention (CDC), said he expected the government to further hike taxes on tobacco, since teenaged smokers are more price-sensitive.

“We believe that hiking prices will impact minors in large part because they don’t have their own income,” he added.

It will be interesting to see how this plays out.

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