Profile: China Tobacco Jiangxi Industrial Striving to be More Competitive

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China Tobacco Jiangxi Industrial Co., Ltd. – the operator of the tobacco industry in east China’s Jiangxi Province – is striving to make its leading cigarette brand, Jinsheng, more competitive by significantly improving the appearance and flavor and making them more marketable.

By TobaccoChina

Innovation-driven development

So far in 2016 – the first year of China’s 13th Five-Year Plan for National Socioeconomic Development – the central government of China and all industries in the country attach great importance to innovation. In his government work report delivered at an annual session of the National People’s Congress in March, Chinese Premier Li Keqiang said that innovation was the primary driving force leading development, which must be in the core of the entire national socioeconomic development, and that the strategy for innovation-driven development must be carried out in an in-depth way.

The Chinese tobacco industry has also taken innovation as a primary driving force for its development. Speaking at the 2016 national tobacco science and technology work conference held in Beijing last March, deputy director-general Yang Peisen of the State Tobacco Monopoly Administration (STMA) – the regulator of China’s tobacco industry – put forward the strategy for a vigorous launch of innovation-driven development, with innovation of brands, technology, and variety driving and promoting the innovation of products.

Over recent years, China Tobacco Jiangxi Industrial Co., Ltd. (CT Jiangxi) has been making efforts to promote the development of its Jinsheng brand by means of innovation, through continuous investigation and research, practice, and vigorous promotion of the development of the company’s four major systems of raw materials supply, research and development, manufacturing, and marketing.

Path of innovation-driven development of Jinsheng

More and more people realize that the model of resource-driven economic growth has come to an end, and that innovation will be of vital importance to future development of China. Under the general situation of a slowdown in economic growth and weak demand for goods and services, cigarette sales there have been negatively impacted. So far, the economy has entered a “new normal” state featuring moderate but more stable economic growth in the medium-to-long term, following decades of double-digit rapid growth. Presently, the “new” situation in economic operation is obvious, but the widely anticipated “normal” is still to be realized. Therefore, it is necessary to complete a process of improving the quality of growth in economic operation, and develop a new platform for medium-to-high speed growth on an as-long-as-possible term. Where can companies get the driving force needed for increasing domestic demand that will lead to high growth in future? Doubtlessly, the driving force will probably stem from unswerving adherence to innovation-driven development.

It was in 2015 when the tobacco industry underwent a new round of reform and development toward the “new normal” and when cigarette brands increasingly competed with one another that CT Jiangxi unveiled its strategy to make the Jinsheng brand more competitive.

In 2015, CT Jiangxi completed the process of improving the quality of 12 specifications of its cigarette products in production; completed the development of five new specifications of Jinsheng brand cigarettes (Tengwangge hard pack, soft pack, and slims) and Ruixiang slims and soft pack) and successfully presented them to the market; and completed the development of five other specifications of the Jinsheng brand family (Tengwangge (Yuzhouchangwan and Jinyetianxiang), Hongruixiang, Classic Ruixiang, and Zhishengchushan (15+1).

What caught the attention of the tobacco industry is that in comparison with dozens of new cigarette products presented to the marketplace by other tobacco manufacturers, the five new products of the Jinsheng brand including Tengwangge have been quite well received at the marketplace over the past few months.

While continuing to develop and present new cigarette products, CT Jiangxi also makes efforts to develop new series of products – mainly the Tengwangge series, the Qinghuaci series, and the Ruixiang series. All are named after well-known cultural or historical heritage of Tengwangge (which literally means the pavilion of Prince Teng -- one of the three great towers of southern China), Ruixiang (Daphne odora – a well-known local product), and the blue and white porcelain that can be attributed to Jiangxi and of which the people there are proud.

Development of four major systems under guidance of leading line

It was Yao Qingyan, leader of CT Jiangxi, who defined the guideline for the company’s future development. “Our leading line is to strive to explore a path suitable for our development based on continuous investigation and research and practice.”

To meet the increasingly intense competition in the market and sharpen its competitive edge, starting in 2015 CT Jiangxi focused its energy on promoting the development of the company’s four major systems of raw materials supply, research and development, manufacturing, and marketing, in order to upgrade the definition of the Jinsheng brand family, and also upgrade the products, image, and values of the brand.

In terms of raw materials supply, CT Jiangxi adhered to selecting the best among high-quality raw materials, and designated new raw materials production areas. As a result, the company has four new exclusive high-quality raw materials production and supply bases one each in Jiangxi, Yunnan, Hunan, and Henen provinces.

In terms of research and development, CT Jiangxi upgraded the production of its 10 existing products, supplied 3 new classic products, and presented 4 new products to the market. It is also developing a series of high-quality products.

In terms of manufacturing, the company designated its affiliated Nanchang Cigarette Factory as the leading manufacturer of Jinsheng with cigarette factories in Ganzhou, Jinggangshan, and Guangfeng supporting it. These four cigarette factories have made great efforts to stabilize product quality, improve production technology, cut costs, and reduce the consumption of raw materials, achieving remarkable successes.

Where did the company’s current confidence in sharpening its competitive edge in the market come from? Actually, it originated from the development of new Jinsheng, which has gone beyond the pattern of developing new products by categories, with energy directly focused on specific products rather than categories of products. Whenever people talk about Jinsheng, they will naturally recall that they look good, taste good, and sell well.

Strength of naming products after cultural sights or heritage

In the eyes of CT Jiangxi, the cultural and historical heritage that inspired the names of the products are yet another positive attribute of the brand. The development of the Tengwangge series cigarette products was a first step taken by the group in naming its products after famous cultural or historical heritage to back sales promotion. As one of the three great towers of southern China, Tengwangge is not only an ancient architecture, but is also part of the cultural and history of the province, with much cultural potential yet to be tapped. Therefore, when consumers smoke an aromatic and tasteful Jinsheng Tengwangge cigarette, the cultural and historical significance of Tengwangge will come to mind.

So far, the three major series of the Jinsheng product line has basically been formed. In particular, the Tengwangge series is a large-scale series, with Ruixiang being the medium-to-high-end product, and Zhisheng the high-end product. Besides the family culture represented by Tengwangge, CT Jiangxi also tapped into the cultural significance of Ruixiang and blue and white porcelain.

Besides efforts to promote sales by means of association with cultural and historical heritage, CT Jiangxi makes use of rapidly developing modern telecommunication technology, namely mobile internet, by introducing marketing on the WeChat app system, marketing within social circles, and with two-dimensional codes to publicize its brands and improve its corporate image, which is yet another major characteristic of the company’s efforts to present new products to the market, and which means a great new change.

From the company’s four major systems, the systems of raw materials supply, research and development, and manufacturing are an important guarantee for turning “good formulas into good products”, while the system of marketing is a crucial step in turning “good products into good commodities”. It is remarkable that CT Jiangxi has chosen association with cultural and historical heritage as a new path of development and that it has combined this with the use of modern telecommunication technology to promote sales.

In inspecting the tobacco industry of Jiangxi in November 2014, STMA director-general Ling Chengxing proposed that the tobacco industry of Jiangxi meet the target of increasing its annual cigarette sales to 2 million cases (100 billion cigarettes), increasing its annual leaf tobacco output by 2 million dan (100,000 tons) and increasing its annual amount of taxes and profits to CNY30 billion (US$4.6 billion), which is known as the “223” development target.

With the “223” development target in mind, China Tobacco Jiangxi Industrial Co Ltd is at a new starting point. By means of promoting the transformation of Jinsheng through innovation-driven development, the company has found a new path of development compatible with intense competition in the market.