Anti-smoking campaign has little effect on big tobacco

(Ecns.cn) – In a report filed at the Shanghai Stock Exchange on Monday, Industrial Bank Co Ltd made public the financial data of the China National Tobacco Corp (CNTC) for the first time ever, revealing that the annual net profit of the nation's cigarette monopoly may be even larger than Bank of China's, according to the Beijing News.

The state-run tobacco giant had a net income of 117.7 billion yuan (US$18.6 billion) in 2010 on sales of 770.4 billion yuan (US$121.9 billion), and is planning to buy a 5.2 billion yuan (US$822.6 million) stake in the Shanghai-listed lender.

However, as the largest manufacturer of tobacco products in the world by sales, CNTC has long been criticized for its monopoly practices.

Moreover, awareness of smoking as a major public health issue has grown in China, causing the country's Ministry of Health to roll out a number of measures against it, including a smoking ban in public places and hefty fines for violators. Nevertheless, those measures have done little to curb tobacco use.

Too big to lose?

According to the Industrial Bank report, CNTC's profit was close to Shanghai-listed China Construction Bank's 2010 net profit of 135 billion yuan (US$21.4 billion), the third highest among listed companies in China, with the Industrial and Commercial Bank of China and the China National Petroleum Corporation filling the top two slots.

Yet CNTC's profitability is a reflection only of the nation's tobacco industry, which has contributed greatly to overall economic development.

According to statistics disclosed at the 2012 National Tobacco Work Conference, the entire tobacco industry in China paid 753 billion yuan (US$119.1 billion) in industrial-commercial taxes last year, up 22.5 percent year on year, among which 600.1 billion yuan (US$94.9 billion) went to the national treasury, reported the Beijing Times.

The country's biggest taxpayer was Shanghai Tobacco Group, which paid 43.7 billion yuan (US$6.9 billion) in taxes for the 2011 fiscal year.

Bad habits die hard

According to the World Health Organization, about 67 percent of Chinese men smoke, while about 3 percent of women do. In 2008, China's Ministry of Health announced that the country had around 350 million smokers (there were still over 300 million just last year).

Each Chinese smoker contributes over 330 yuan (US$52) to CNTC's profits each year, which has much to do with its status as the nation's cigarette monopoly.

Established in 1982, the CNTC has a firm hold over the country's massive population of smokers. The company falls under the jurisdiction of the State Tobacco Monopoly Administration, which is responsible for enforcing tobacco monopoly laws in China.

On one hand, the company must increase its production of cigarettes and take advantage of its position to boost net profits as well as contribute to taxes. On the other hand, it has to answer the national call of the anti-smoking campaign by reducing cigarette sales.

The two goals clearly contradict one another, and the company has drawn much criticism from home and abroad for abusing a system that continues to undermine public health.

Last Thursday, Chinese social media users were up in arms over the latest addition to the country's lineup of luxury cigarettes: an extremely high-end version of the Good Cat brand made by China Tobacco Shaanxi Industrial Co Ltd (a CNTC affiliate), which fetches as much as 5,600 yuan (US$885.9) a carton.

Scaling back?

During the CPPCC session which opened on March 3 this year, a proposal was jointly submitted by the All-China Federation of Industry and Commerce and other organizations to request that the government consider waving windfall taxes for such enterprises.

Yet only last December Xie Jianping, vice-president of the Zhengzhou Tobacco Research Institute of the China National Tobacco Corp, was inducted into the Chinese Academy of Engineering (CAE) for his research on tar reduction in filter cigarettes. He has since been dubbed the "Killer Academician" and "Tobacco Academician" by those who say his research might result in even more harm from tobacco.

Many agree that tar reduction is not a responsible way to protect smokers (and does nothing to protect others from second-hand smoke), but might instead encourage them to consume more cigarettes.

This month, a total of 281 CPPCC delegates suggested that the government should demand tobacco companies to gradually reduce their scale of cigarette production, and control sales of cigarettes in an effort to cooperate with the anti-smoking campaign.

Tobacco makers should also make public their timetables for reduction, said the Beijing Times.

Nearly 1.2 million Chinese people die from smoking-related diseases every year, according to the Ministry of Health. Because of a sharp increase in cigarette sales in the past 30 years, around 2,000 people a day are currently dying from smoking in China.