Law And Economic Research On The Supervision Of China's Tobacco Industry Under The Monopoly System

The tobacco industry is always under the government control more than other industries all over the world,the reason is that the tobacco industry has its specific characteristics, Although the tobacco products is harmful to human's health and addictive, but it's not the prohibited goods. The government does not encourage the smoking behavior, the supervision of the tobacco industry is more powerful than other industries. At present China is few countries who carry out the tobacco monopoly system. The purpose of our country carrying out the tobacco monopoly system is"planned management and organization of tobacco monopoly commodities, production and management, improve the quality of tobacco products, safeguard the interests of consumers, ensure the country's revenue."Most countries carrying out the tobacco monopoly system are for the country's revenue. In recent years, China keeps steady growth in production and sales of tobacco industry, the profits and taxes become more and more every year, the tax paid by the tobacco industry accounts for nearly 10% of government revenue. The development of tobacco industry is very important to the local economy and foreign exchange creation. The purpose of China government imposes a high tax on tobacco industry is to restrict the production and sales of tobacco, when consumers purchase the tobacco products, they also take a part of the tax, increasing their cost of smoking, so as to achieve the purpose of smoking ban.With the development of market economy, our country face the challenges are more and more. In addition to facing the economic globalization, the challenges of joining in the WTO, the defective regulatory mechanisms, institutions and the imperfections of the system is the very important reason of hindering the development of tobacco industry.First, the problem of local protection in China's tobacco industry is very serious. The local governments take some measures that inconsistent with market economy rules and the provisions of the tobacco monopoly law and its related, set the entry barriers to the nonlocal tobacco products,restrict or prohibit their entry into local markets. This is not conform to the market demand-oriented, relying on administrative rights to carry out the discriminatory policies on nonlocal tobacco products, set high barriers to entry for them, that lead to lower competitiveness of china's tobacco industry, can not to cultivate large tobacco companies and tobacco brands who has international influence, and harm the legitimate interests of consumers and the fairness of the competition among vendors.Second, the industrial concentration of China's tobacco industry is very low. Now China has 44 tobacco manufacturers, most of them are in the minimum production scale set by the country (annual output of 30 million cases), contrasts sharply with the major international tobacco manufacturers. China's tobacco industry's industrial concentration is far behind the developed countries, industry concentration is low, poor scale economy, skill levels are also difficult to raise.Third, the international competitiveness of china's tobacco industry is not strong. Although we have many brands of tobacco products, but did not have the international reputation of the brand, and did not have our own characteristic form of goods. The tobacco production technology is in the lower level, high tar, poor sensory, the production quality and variety of tobacco products can not with the world. Especially after China's accession to WTO, in addition to enjoying the treatment of mfn and gsp, timely access to a large number of information resources, should also take into account the significant reduction in tariffs, reduction and cancellation the impact of policy protection to the tobacco industry in china. Therefore, the government should carry out rectification on tobacco industry in the transition period, to enlarge and strengthen our tobacco businesses, to form several international tobacco companies and brands with international influence.At last,China's tobacco industry pricing disorder. The price of cigarettes in china are in various forms, and each form is not uniform in every provinces, lead to the cigarette sales reflux, so that unscrupulous traders have the opportunity to engage in illegal activities. And instable wholesale prices also led to instability of the retail price of cigarettes, impact of tobacco brand and consumer loyalty to the brand.To solve these problems, China must make some countermeasures for the tobacco industry. From the world view of the development process of tobacco regulation, monopoly system is not the final destination, at present, china's monopoly system of tobacco industry has been showing a trend of disadvantage more than advantage. However, the reform of regulatory mechanisms can not be done overnight, is a gradual process of change.First, speeding up the process of business separation is inevitable. It's china's economic requirements from a planned economy to a market economy,China's tobacco monopoly system has been a long time, lead to the lack of competition in the market of tobacco industry, local protection barriers, administrative monopoly is serious, the subject of the market is inequality. Carry out the business separation system, ensure the effective control of the government of the tobacco industry, industrial enterprises and commercial enterprises all directly face to the competition to survival of the fittest in the existing tobacco enterprises, to achieve the optimal allocation of resources.Second, china's tobacco industry under the protection of the monopoly system is more like an executive. As the gradual opening of the tobacco market in china after joining in the WTO, establish a sound and effective corporate governance structure should be an important condition for foreign competition. Separating the role of government from enterprises in the tobacco industry, should be proceed joint-stock reform in some major tobacco enterprises, and establish a modern enterprise mechanism of market competition.Third, the price controls on tobacco should be in effective reform. The cigarette prices is in various forms in china, and because of local protection each province is not the same as the tobacco price, the main interest is too much, difficult to manage. Only reform on our existing pricing system, it can solve the present chaotic situation of tobacco price. Full use of the price control mechanism to regulate the tobacco market, production and management actions, full use of market resources, improve the market competitive, that can create a market influence of cigarette brands, make the tobacco industry in our country more competitive internationally.The last, China's tobacco industry need tax reform. The government's revenue mainly comes from the tobacco tax, so most problem of tobacco industry now can be related to tobacco tax. Therefore, the reform of the tobacco tax is the most important. In the tax reform, both handle well the relationship between local fiscal revenue and tobacco taxes, should also pay attention to the scale of tobacco tax reform.