Like a tycoon buying a sports franchise, China National Tobacco Corporation’s soon-to-be-finished Guangzhou head office is intended as a powerful statement.
The giant glass-and-steel Pearl River Tower is designed to be the most energy-efficient “super tall” building in the world. Company executives like to talk proudly of the building’s environmental excellence.
But the Pearl River Tower is also a symbol of the cigarette industry’s enduring strength. China still loves to smoke.
Although more than a million people died last year from smoking-related illnesses, China’s state tobacco monopoly broke all records in profits: over $75 billion, thanks in part to last year’s tax hike (see WiC21).
Much of that goes straight into the government treasury.
“The big increase in tax income from the tobacco industry is actively contributing to the security of government finances,” claims State Tobacco Monopoly Administration spokesperson Zhang Xiulian.
In a not-so-subtle bid to raise tax revenue last year, one county in Hubei province even compelled its civil servants to purchase 23,000 local cigarettes a year. The order was eventually withdrawn after heavy criticism in the press.
Anti-smoking advocates say that China should be more focused on what tobacco sales cost the country – and not the revenues that they raise for state coffers.
They estimate that the financial burden imposed by smokers on the nation’s medical system is at least $37 billion (and probably a lot more), which is less than half of what the industry claims to be bringing in.
In a nation where 60% of doctors smoke and 1.7 trillion cigarettes get smoked annually, defeating the nicotine habit will be harder than elsewhere.
It remains to be seen whether the government’s latest efforts to discourage smoking will dent its popularity. Last week the Centre for Disease Control and Prevention announced new initiatives to ban public smoking in seven of the country’s most important industrial cities, including Tianjin, Chongqing and Shenzhen.
“The project will be scaled up to cover the whole nation in the future to protect more people from smoking,” predicts CDC director Wang Yu.
Shanghai also plans to ban smoking in most public areas from March, ahead of the Shanghai Expo.
According to reports, there could be a comprehensive ban on cigarette advertisement and promotion in place by 2011.
That may sound like a serious new effort. But, as we’ve noted before, loopholes abound. In the past cigarette companies have even claimed that their billboards are public service announcements (see WiC3).
The latest industry tactics look similarly cynical (or creative, depending on your point of view).
Several tobacco companies are now financing the rebuilding of schools demolished in the 2008 Sichuan earthquake.
As part of the deal, each school is also carrying the name and logo of a cigarette brand. The “Sichuan Tobacco Hope Elementary School” is just one of at least 17 similarly named schools.
Clearly hoping to establish a bond with an impressionable young audience, the tobacco company has gone one step further at the Tobacco Hope school. It has also erected a stone memorial, emblazoned with at least one useful life lesson for the young students.
The insight on offer? “Determined to contribute to society, Tobacco helps you to be successful” is the motif.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.