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China, dealing with challenges in the global tobacco market, is planning additional reshuffling in its domestic industry.

The State Tobacco Monopoly Administration will try to establish some 10 large-scale tobacco enterprises through mergers and reorganizations within the next five years, Xing Wanli, spokesman of the administration, said at a press conference yesterday.

According to him, the big enterprises should build a key cigarette brand with annual sales of more than 3 million cartons, or 150 billion cigarettes.

Currently, there are only five brands, Baisha, Honghe, Hongmei, Hongjinlong and Hademen, whose sales exceeded one million cartons, or 50 billion cigarettes, last year.

"We will foster the development of key brands and big enterprises, to compete in the world market," Xing said.

He said that the country's tobacco industry has seen a steady development during the past year.

Statistics from the administration show that 1.947 trillion cigarettes were sold in 2005, 3.7 percent up from the previous year.

The country produced 1.942 trillion cigarettes, 3.67 percent more than the production in 2004. Stocks remain at a steady level.

With a consistent growth, the industry made 240 billion yuan (US$29.6 billion) in pre-tax profits last year, a year-on-year growth of 14 percent.

The administration has adopted a series of measures, such as raising the purchasing price of tobacco leaves and giving technical trainings, to stabilize the tobacco planting and improve quality of tobacco leaves, said Hu Xinhua, deputy director of the administration's general office.

When trying to promote the industry's competitiveness, the administration also stepped up efforts to fight production and sale of counterfeit and shoddy tobacco products, Hu said.

Last year, 7.3 billion counterfeited cigarettes were confiscated and 2,908 illegal production sites and 23 illegal sales networks were closed.

The administration started to close inefficient and small cigarette factories and restructure the sector in 2001.

The move has made significant progress in the industry.

At the end of last year, China had 44 tobacco manufacturing enterprises, from 185 in 2001. The industry also cut its cigarette brands from over 1,800 in 2000 to 203 last December.

Meanwhile, the sector paid more attention to corporate governance. Thirteen enterprises completed their management restructuring in 2005.

(China Daily January 12, 2006)