Understanding China's formidable cigarette industry - FSI Stanford

Newly printed ?no smoking? signs went up across China when the government rolled out a nationwide public indoor smoking ban in May 2011. A sticky gray layer of smoke residue now coats many signs, representing the challenges China?s growing tobacco control movement faces against a multibillion-dollar government-run industry and deeply embedded social practices.

How has the cigarette become so integrated into the fabric of everyday life across the People?s Republic of China (PRC)?

To get to the heart of this question, historians, health policy specialists, sociologists, anthropologists, business scholars, and other experts will meet Mar. 26 and 27 in Beijing for a conference organized by Stanford?s Asia Health Policy Program. They will examine connections intricately woven over the past 60 years between marketing and cigarette gifting, production and consumer demand, government policy and economic profit, and many other dimensions of China?s cigarette culture.

Anthropologist Matthew Kohrman, a specialist on tobacco in China, will lead the conference. In a recent interview, he spoke about the history of China?s cigarette industry, cigarettes and society, and the tobacco control movement.

The early years

Tobacco first entered China through missionary contact in the 1600s, says Kohrman, but it was not until the early 20th century when cigarettes began gaining popularity. The first cigarette advertising was a ?confused tapestry? of messages as marketers figured out what spoke to the public. ?There were just as many images of neo-Confucian filial piety as there were of cosmopolitan ?modern women,?? says Kohrman.

Through improved marketing and aggressive factory building, British American Tobacco and Nanyang Brothers, China?s two largest pre-war firms, helped increase the demand for cigarettes. The Sino-Japanese War (1937?1945) disrupted the cigarette supply, but their popularity had taken hold. Some cigarette firms shifted during the war to the relative safety of southwest China, where tobacco production has remained concentrated ever since.

Post-1949

After the founding of the PRC in 1949, the tobacco industry was nationalized and strong relationships between the central government and cigarette manufacturers in the provinces were formed. Cigarettes also began to be viewed as a part of everyday life. ?Ration coupons for cigarettes were issued alongside grain, sugar, and bicycle coupons,? says Kohman. ?The Maoist regime legitimized cigarettes as the right of every citizen."

During the Deng Xiaoping era (1978?1997), China?s cigarette industry really took off as manufacturers competed with one another for foreign currency to purchase cutting-edge European equipment and newer varieties of tobacco seed stock. Increased production and the return of full-scale advertising fueled greater consumer demand, and manufacturers began producing more and more varieties of cigarette. Vendors displayed glass cases filled with a colorful patchwork of cigarette packs bearing names like Panda, Double Happiness, and Red Pagoda.

The tobacco industry remained under government control as other industries privatized in the 1980s and 1990s. Party-state management of the cigarette became even more centralized in the early 1980s with the creation of the China Tobacco Monopoly Administration and its parallel external counterpart, the China Tobacco Corporation.

Since 1949, provincial protectionism has marked the cigarette market. It is now possible to purchase Beijing cigarettes in Kunming, Chengdu brands in Shanghai, and so on, but to distribute cigarettes in another province, a manufacturer must cut a deal with provincial government officials. Provincial administrations are loath to cut such deals because central government policy dictates that sales tax on cigarettes, which do not go to the central government, always return back to the province of original production. China?s 2001 entry into the World Trade Organization opened the market ever so slightly to international brands like Marlboro and Kent, but domestic brands continue to dominate because of fierce protectionism.

...If it chooses to do so, China is in a position to lead and change the landscape in a very profound way.
-Matthew Kohrman, Professor of Anthropology, Stanford
A new era

In 2003, the World Health Organization established the first global health treaty, the Framework Convention on Tobacco Control (FCTC). Although the United States still has not yet ratified the FCTC, China signed the treaty in 2003 and ratified it in 2005. Kohrman says China?s tobacco industry giants fear competition from international cigarette brands more than they worry about tobacco control measures related to the FCTC.

Nonetheless, the FCTC ushered in a new era of public health research about tobacco and has helped increase public awareness about the dangers of smoking. New restrictions have been imposed on print and television advertising for cigarettes, and international organizations, such as the Bloomberg Family Foundation, have begun funding anti-tobacco work in China.

A big challenge to tobacco-control campaigns, says Kohrman, is the sheer amount of money that tobacco companies have available for marketing. ?In 2010, China?s tobacco industry posted profits in excess of U.S. $90 billion?that?s huge. Tobacco control research and advocacy now annually receive a few million dollars, and much of that is coming through outside funders, which have very specific projects in mind.?

China?s tobacco advertisers have adapted to the new restrictions that prevent them from openly promoting cigarettes in the media. They have instead moved to point-of-sale and soft-marketing tactics, including misinformation campaigns about the ?dangers? of quitting smoking. ?The actual expenditure on marketing probably hasn?t dropped very much,? says Kohrman.

Cigarettes and society

Strong marketing and the legitimization of cigarettes as a part of everyday life have led to the deep integration of cigarettes into Chinese society. While only 3 to 4 percent of women in China smoke, cigarettes are an important part of male identity and social mobility. The wide range of cigarette brands has led to the growth of high-end varieties favored by businessmen and politicians, with some brands costing as much as $50 a pack. The custom of cigarette gifting has existed in China for decades, and it is difficult for a young man to turn down a package of cigarettes from a senior colleague or supervisor.

There is also the fact that nicotine is highly addictive, and quitting is difficult in an environment where smoking cigarettes is socially sanctioned. Kohrman says, ?When you take an incredibly addictive substance like nicotine and throw it into the mix of all of these norms and customs, it creates a pretty toxic brew.?

The future?

Tobacco control presents a formidable challenge in China, one that requires understanding the historical context and complex dimensions of the cigarette industry. ?Cigarettes have been insinuated into so many aspects of daily life across China, and the market for this product has now become so closely enmeshed with matters of government finance and operations,? says Kohrman.

What happens in China could have implications for the entire world. ?There?s a tobacco-induced human annihilation unfolding right now in almost every country and questions about how society and Big Tobacco are enmeshed, and how cigarette culture and government finance have become mutually supportive are pivotal,? says Kohrman. ?Every country except Bhutan has legalized cigarette sales and is subject to the same issues as China?only in China they?re on a much larger scale. But if it chooses to do so, China is in a position to lead and change the landscape in a very profound way.????

Source: http://fsi.stanford.edu/news/3340

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