China Prime Market for Tobacco Producers

July 5, 2001 -- China is a prime example of a country where there is a vast disparity between the number of male and female smokers. It also represents a huge opportunity for foreign tobacco makers.

Around 63 percent of Chinese males between the ages of 15 and 69 smoked in 1996, while only 4 percent of females in the same age range did, according to figures from the American Cancer Society. With around 1.7 trillion cigarettes consumed a year, China already represents around one third of the world's tobacco market.

Though more than 99 percent of the country's tobacco market is dominated by China's state-owned tobacco company, companies like British American Tobacco, which makes Lucky Strike and Pall Mall cigarettes among others, are slowly making inroads there. BAT recently announced that it is in discussions with the Chinese government to set up a joint venture in China.

BAT is no stranger to the Chinese market. The recent WHO report notes that the company hands out free samples of its 555 brand of cigarettes at nightclubs in Beijing in an effort to attract the youth market, including women.

The China Syndrome

Many tobacco critics say the only reason for a foreign company to be in a country like China in the first place is to attract non-smokers, namely women. But BAT spokesman David Betteridge says that assumption is "nonsense."

BAT often gives out cigarette samples in aged-restricted venues such as nightclubs in various countries, but only to people who are already smoking, says Betteridge. The strategy is not to get non-smokers smoking, but to convince smokers to switch to a BAT brand. Though various reports claim that cigarette samples often are given to non-smokers, Betteridge insists that those instances are contrary to company policy.

"It's trying to persuade smokers of whatever sex either to stick with our brand, or better still, change," says Betteridge. "A woman smoker may find an international cigarette more appealing than what she usually smokes, but that's just choice at the end of the day."

That argument, however, doesn't hold water for some critics, who note that in countries like Sri Lanka where BAT also gives out samples in nightclubs, the company had a 100 percent market share in 2000, according to the Maxwell Report.

But BAT officials say that market share figure doesn't take into account sales of illegal tobacco products or of beedi, an inexpensive, leaf-rolled tobacco that is produced on a small scale throughout the country. Taking bootleg products into account, BAT claims its Sri Lankan subsidiary, the Ceylon Tobacco Company, holds only 40 percent of the country's market.