China’s Ministry of Industry and Information Technology (MIIT) recently announced further restrictions on foreign investment in the country’s tobacco industry, blocking enterprises with foreign investments from participating in tobacco wholesale, retail, and alternative forms of trading, according to a story by Alexander Koty for China Briefing.
These new restrictions have come on the heels of various government efforts to reduce China’s tobacco use.
The government’s restriction of foreign competition is said to be largely explained by tobacco’s ‘extraordinary profitability’. Between seven and 10 percent of all government revenue comes from tobacco sales, giving the State Tobacco Monopoly Administration vast power.
While the long term costs of medical services and the premature losses of workers is claimed to be higher than the immediate profits from tobacco sales, it is difficult for the government to jettison a steady source of revenue by committing to tobacco dissuasion at a time when other revenue streams are slowing.
Nevertheless, government efforts to discourage smoking, however half-hearted, combined with China’s massive smoking population offer immense but difficult-to-grasp potential for tobacco cessation products.
For instance, there is little awareness of electronic cigarettes in China, and those who use them generally do so as a fashion statement.
The electronic cigarette industry is currently unregulated by the government, though the National Health and Family Planning Commission has stated its intent to regulate the production, sale, and use of electronic cigarettes.
The disappointing performance of tobacco cessation products so far is in part explained by high costs, but it is down also to fact that a lot of smokers don’t want to quit. Fewer than 25 percent of Chinese adults are aware of the specific health hazards of tobacco use.
The full story is at: http://www.china-briefing.com/news/2016/06/28/why-china-has-banned-foreign-investment-in-the-tobacco-industry.html.