China signs agreement with Cuba to boost up its cigar sales

Global Business

China signs agreement with Cuba to boost up its cigar sales

China’s State owned Tobacco Corporation has signed an agreement in Havana aimed at boosting Cuban cigar sales to China.

There is a growing demand for luxury goods in China including premium Cuban cigars. Initially the accord will cover distribution and sales but could later extend to production and technical cooperation.  

According to CGTN’s Michael Voss in Havana, China is already the third largest market in the world for Cuban cigars, behind Spain and France, with the premium Cohiba brand proving particularly popular. 

So far Cuban cigars are only available for sale in eleven of China’s 23 provinces. That could be about to change after both sides signed a letter of intent to increase cooperation and boost sales.

 “This agreement between Cuba and China includes commercial, industrial and technical cooperation,” general manager of China National Tobacco Corporation, Ling Chengxing said.

More than 300 million Chinese smoke, according to the World Health Organization, almost a third of all the smokers in the world.  And as people become more affluent, some are turning to Cigars.

Cuba already accounts for half of all the cigars sold in China, it’s about 70 percent in terms of revenue and both sides agree that there is an enormous potential for growth.

Habanos S.A.  is a joint venture between Cuba’s state tobacco company and Britain’s Imperial Tobacco.  The company’s co-president is Inocente Núñez,

“Our initial intention is to get Cuban cigars into the market with greater force.”  Núñez said.

“We will also collaborate in a distribution network to help educate Chinese smokers about the different types of Cuban cigars and tobacco.”

Now with this new accord, they are considering setting up a separate subsidiary with China National Tobacco Corporation, which has a virtual monopoly on all manufacturing and distribution of tobacco products in China.