The structural reform of Chinese tobacco manufacturing enterprises has now entered the stage of inter-provincial restructuring.

On September 26, 2008, China Tobacco Guangdong Industrial Corporation in south China’s Guangdong province and China Tobacco Guangxi Industrial Corporation in southwest China’s Guangxi region underwent interregional reorganization and restructuring, leading to mutual shareholding.

On November 8, 2008, Hongyun Tobacco Group and Honghe Tobacco Group in southwest China’s tobacco-producing Yunnan province merged to form the HongyunHonghe Tobacco Group – the largest Chinese tobacco manufacturer today.

In October 2009, the Heilongjiang Tobacco Industry Co., Ltd. in northeast China’s Heilongjiang province and China Tobacco Hubei Industrial Corporation in central China’s Hubei province underwent interregional reorganization and restructuring.

Besides corporate restructuring, the capacity of leading Chinese cigarette brands has continued to increase over recent years. In 2008, there were 13 Chinese cigarette brands each with an annual sales volume of over 50 billion cigarettes (1 million cases).

Since 2009, China, as a signatory state to the Framework Convention on Tobacco Control (FCTC), has taken steps to strengthen implementation of FCTC, including efforts to enlarge the size of health warning signs on the packaging of cigarettes. Along with continued development of tobacco control initiatives, cigarette packets will eventually have warning pictures printed on them.

Since society is becoming increasingly concerned about food safety, hygiene and environmental protection, the State Tobacco Monopoly Administration (STMA) – the regulator of China’s tobacco industry – is attaching greater importance to environmental protection by the tobacco industry, with plans for lowering the contents of tar and other harmful substances in cigarettes, energy conservation programs, emissions reduction initiatives and the development of green cigarette packets.

The tobacco printing industry is also speeding up the development of environment-friendly technologies.

Over recent years, the tobacco industry has promulgated a series of stringent standards governing the production of cigarette packaging, including the YC/T207-2006 Static Headspace Gas Chromatographic Method for Determining Volatile Organic Compounds in Packaging Paper of Cigarette Cartons and Packets, and the YC263-2008 Standards for Limiting the Content of Volatile Organic Compounds in Packaging Paper of Cigarette Cartons and Packets.

As a result, in 2008, the tested content of volatile organic compounds (VOC) became a standard for determining the quality of cigarette packaging that may lead to outright rejection. If the tested content of VOC fails to meet the standard, the whole batch of cigarette packaging will be determined as substandard and will be rejected by cigarette factories. Therefore, limiting VOC content has created a harsh test for all cigarette packaging printing enterprises. At the same time, however, it has contributed significantly to the development of environmentally-friendly packaging.

Mirroring the manufacturing sector, the tobacco printing industry has also started a new round of structural reform. Intense competition has pushed cigarette packaging printing enterprises into different directions.

"So far, reform of the tobacco industry has entered the stage of inter-provincial reorganization and restructuring," according to Li Lianjun of Shenzhen Jinjia Color Printing Group Co., Ltd. in Guangdong in a recent interview with Chinese media. "Restructuring of the scope of business of enterprises has been even greater. In particular, order forms are highly concentrated in the hands of a small number of big competitive enterprises. Today, orders for goods can no longer be determined by traditional personal connections only. Production capacity, technological strength and product quality can all become bargaining chips in competition among enterprises."

"Presently, in struggling to survive and meeting realities, some printing enterprises have shifted onto the fields of color packaging and soft packaging printing, to find new profit," added He Zhanghui of the technology center of Dongguan Aoke Industries Co., Ltd., also in Guangdong. "Some printing enterprises are choosing to enter into association with powerful partners in the printing industry and try to bring them under their flags, in order to take greater market shares," he said.

At the same time, some powerful printing enterprises with sufficient funding capacity are benefiting from reform of the tobacco industry. Big interregional orders are now flowing to these companies, earning them big profits. Moreover, acquisitions of small enterprises over recent years have contributed to enlarging production capacity.

In 2008, many tobacco printing enterprises, seeking to put their profits to work, started a new round of interregional acquisition and merger.

For example, Shenzhen Jinjia Color Printing Group Co., Ltd. acquired shares in many packaging companies in other Chinese regions in 2008, significantly enlarging its production capacity.

Along with the constantly changing tobacco industry environment, the printing industry has also seen changes over recent years. In the face of various challenges, how can packaging printing enterprises manage to turn challenges into opportunities?

At times of drastic industrial change, enterprises with powerful technological capacity have a distinct advantage in an intensely competitive market.

Presently, intaglio printing technology needs to be upgraded while flexo printing faces vigorous development opportunities. The rise of big competitive cigarette brands over recent years has contributed to increasing large, long-term orders to packaging printing enterprises requiring the printing of highly stable packaging in short periods of time.

With high stability ink, high production efficiency and fine multivariant anti-counterfeiting printing enahancements, intaglio printing has room for further development in the tobacco printing industry.

However, because the tobacco industry has already started applying stringent standards limiting VOC content, and as it will start printing warning pictures on all cigarette packets in the foreseeable future, intaglio printing technology has shown weakness in terms of both environmental protection and graphic printing. Therefore, cigarette packaging printing enterprises in China have all increased the pace of upgrading their intaglio printing technology.

Flexo printing technology has been applied sparingly in the printing of cigarette packaging to date. Compared to intaglio printing, flexo requires little investment in equipment, Flexo printing machines take up a small floor area. In practical applications, flexo printing machines, using environment-friendly water-soluble printing ink among other advantages, are compatible with various other forms of printing machines and follow-up processing technologies, with fast print speed, and lower plate making costs.

As cigarette packaging design heads for simpler and more elegant designes at a lower cost, flexo printing technology may well become the preferred choice of cigarette packaging printing enterprises.

Presently, different printing technologies are typically used simultaneously in the printing of cigarette packaging. To achieve superior printing effects, it will become an inevitable choice that different printing technologies in a production line are integrated effectively. For example, in the printing of multilevel packaging materials, it is feasible to use offset printing technology, and in printing special colors or golden or silver inks, it is best to use sheet-feed intaglio printing.

In terms of controlling VOC content, the tobacco industry is demanding increasingly high technical requirements from its packaging products and is attaching greater importance to the application of new packaging materials as well as new technologies and new techniques.

As a result of increasing awareness of the risks associated with smoking cigarettes, tobacco manufacturing enterprises, in efforts to improve their own image, are increasingly using ‘green’ or ‘environmentally-friendly’ packaging materials. Tobacco manufacturers will be required to use degradable packaging materials that will not pollute the environment and that create as little waste as possible. Therefore, environmentally-friendly inks, white cardboard, transfer method aluminum-foil paper and other environmentally-friendly materials will become mainstream cigarette packaging materials.

In order to guarantee that all of their product batches meet the relevant technical standards, many cigarette packaging printing enterprises have purchased expensive professional VOC testing equipment.

Over the past few years, powerful packaging printing enterprises, while realizing expansion in their own field of cigarette packaging printing, have also extended operations into the fields of papermaking, printing ink production, thin film manufacturing, and so on. For example, Changde Jinpeng Printing Co., Ltd. in south central China’s Hunan province has installed a transfer method aluminum-foil paper production line in its seventh round of technical transformation started in 2007.

Dongguan Aoke Industries Co., Ltd. has also established its own papermaking factory. Shenzhen Jinjia Color Printing Group Co., Ltd. has acquired Zhongfengtian company in a major step towards developing industrial supremacy.

"If an enterprise has its own papermaking factory, it can have relevant smooth technological control over the processes of papermaking, thin film production and printing, while cost control will become easier," according to He Zhanghui of Dongguan Aoke Industries technology center. "If every process can have a cost reduction of just 5%, the accumulated amount of profits from cost reduction alone will be amazing."