The globalisation strategies of five Asian tobacco companies: An analytical framework

Cigarette Packs With URLs Leading to Tobacco Company Websites: Content Analysis

BACKGROUND

Tobacco companies include on the packaging of their products URLs directing consumers to websites that contain protobacco messages. Online media tend to be underregulated and provide the industry with an opportunity to present users with protobacco communication.

OBJECTIVE

The objective of our study was to document the content of websites that were advertised on tobacco packs in 14 low- and middle-income countries.

METHODS

We purchased tobacco packs from 14 low- and middle-income countries in 2013 and examined them for the presence of URLs. We visited unique URLs on multiple occasions between October 1, 2016 and August 9, 2017. We developed a coding checklist and used it to conduct a content analysis of active corporate websites to identify types of protobacco communication. The coding checklist included the presence of regulatory controls and warnings, engagement strategies, marketing appeals (eg, description of product popularity, luxury/quality, taste), corporate social responsibility programs, and image management. We coded brand websites separately and also described social media and other website types.

RESULTS

We identified 89 unique URLs, of which 54 were active during the search period. We assessed 26 corporate websites, 21 brand websites, 2 nontobacco websites, and 5 social media pages. We excluded 2 corporate websites and 14 brand websites due to limited accessible content or incomplete content. Corporate social responsibility was discussed on all corporate websites, and marketing appeals were also common. Corporate websites were also more likely to include more nonspecific (12/24, 50%) than specific (7/24, 29%) health warnings. Promotions (6/7, 86%) and sociability appeals (3/7, 43%) were common on brand websites. The small number of social media webpages in our sample used gendered marketing.

CONCLUSIONS

URLs appearing on tobacco packs direct consumers to websites where users are exposed to marketing that highlights the "positive" contributions of tobacco companies on corporate websites, and extensive promotions and marketing appeals on brand websites and social media pages. It is essential that marketing regulations become more comprehensive and ban all protobacco communication, a policy that is in line with articles 5.3 and 13 of the World Health Organization Framework Convention on Tobacco Control. For countries that already ban internet tobacco advertising, enforcement efforts should be strengthened. Tobacco companies' use of URLs on packs may also be compelling for plain packaging advocacy, where all branding is removed from the pack and large graphic health warning labels are the only communication on the tobacco packaging. Future research should consider including tobacco websites in marketing surveillance.

Transnational Tobacco Companies and New Nicotine Delivery Systems

While the public health community has focused on the harm-reduction potential of new nicotine delivery systems (NNDSs) and, conversely, their potential for impeding overall efforts to prevent and reduce tobacco use, limited analysis has been conducted on the role of leading transnational tobacco companies (TTCs) in this rapidly growing market. Following aborted efforts during the 1980s and 1990s to develop reduced-risk products, TTCs have heavily invested in selected NNDS products since 2010 via acquisitions and internal research and development. This article catalogs and analyzes the patterns of investment in NNDSs by leading TTCs over time, and identifies differences in the companies' approaches to NNDS product acquisition and development in specific markets globally. This analysis raises important questions regarding the companies' intent, which appears to be to sustain, rather than replace, cigarette sales, and to increase their influence and credibility with respect to NNDS policy and regulation. We identify the need for greater public health vigilance and research to understand and respond to the increasingly significant role of NNDSs in TTCs' global business strategies, to ensure that NNDSs advance, rather than hinder, tobacco control efforts.

"We think globally": the rise of Paraguay's Tabacalera del Este as a threat to global tobacco control

BACKGROUND

Leading transnational tobacco companies (TTCs) began to expand their operations in Latin America in the 1960s. This included legally exporting their cigarettes to Paraguay during the 1960s which, in turn, were illegally re-exported to Argentina and Brazil. By the 1990s, competition between BAT and PMI for this lucrative illicit market, focusing on low-priced brands, prompted manufacturing in Paraguay. Paraguayan manufacturing rapidly grew after the introduction of a new cigarette export tax in Brazil in 1999.

METHODS

We systematically searched Truth Tobacco Industry Documents (TTID) to understand the activities and strategies of leading TTCs in Paraguay and subregion over time. We applied the analytical framework of Lee and Eckhardt (2017) to understand Tabesa's global business strategy. We searched the websites of TTCs and Tabesa for activities since the mid 2000s to understand how the companies publicly describe these strategies. We used the United Nations Commodity Trade Statistics Database (UN Comtrade) as an independent source to crosscheck statements by Tabesa executives about export markets. We contextualized and triangulated our findings with 42 key informant interviews.

RESULTS

Tabesa became the largest cigarette manufacturer in Paraguay, and one of the largest companies in the country, through complicity in the illicit trade. Enabled by market conditions created by leading TTCs, and a permissive regulatory environment in Paraguay, evidence suggests Tabesa had become a major source of illicit cigarettes across Latin America and beyond by the late 2000s. Although Brazil continues to account for the bulk of Tabesa's revenues, findings suggest that the company is aspiring to compete with TTCs in markets worldwide through legal and illegal sales.

CONCLUSION

There is a need for fuller understanding of the risks to global tobacco control from local companies aspiring to compete with TTCs. The rise of Tabesa is part of the changing nature of the illicit trade in tobacco products which must be taken into account in implementing the Framework Convention on Tobacco Control (FCTC) and its Protocol to Eliminate Illicit Trade in Tobacco Products. Potential conflicts of interest concerning Tabesa illustrate the importance of FCTC Article 5.3 on industry interference. There is also an urgent need to address the lack of independent and rigorous data on the illicit tobacco trade in the region.

'Preparing ourselves to become an international organization': Thailand Tobacco Monopoly's regional and global strategies

The Thailand Tobacco Monopoly (TTM) controlled the country’s tobacco industry from its formation in the 1940s, until the government dropped restrictions on imported cigarettes in the late 1980s in response to pressure from the United States. The TTM has since competed with transnational tobacco companies (TTCs) in a semi-monopoly market in which TTCs have steadily increased their market share. Coupled with a decline in national smoking prevalence, the result of Thailand’s stringent tobacco control agenda, the TTM now accounts for a diminishing share of a contracting market. In response, the monopoly has looked to regional trade liberalisation, and proximity to markets with some of the world’s highest smoking rates to expand its operations. Expansion strategies have gone largely unrealised however, and the TTM effectively remains a domestic operation. Using TTM publications, market and trade reports, industry publications, tobacco industry documents and other resources, this paper analyses TTM expansion strategies, and the limited extent to which they have been achieved. This inability to expand its operations has left the monopoly potentially vulnerable to global strategies of its transnational competitors. This article is part of the special issue ‘The Emergence of Asian Tobacco Companies: Implications for Global Health Governance’.

Japan Tobacco International: To 'be the most successful and respected tobacco company in the world'

Japan Tobacco International (JTI) is the international division of Japan Tobacco Incorporated, and the world’s third largest transnational tobacco company. Founded in 1999, JTI’s rapid growth has been the result of a global business strategy that potentially serves as a model for other Asian tobacco companies. This paper analyses Japan Tobacco Incorporated’s global expansion since the 1980s in response to market opening, foreign competition, and declining share of a contracting domestic market. Key features of its global strategy include the on-going central role and investment by the Japanese government, and an expansion agenda based on mergers and acquisitions. The paper also discusses the challenges this global business strategy poses for global tobacco control and public health. This paper is part of the special issue ‘The Emergence of Asian Tobacco Companies: Implications for Global Health Governance’.

KT&G: From Korean monopoly to 'a global name in the tobacco industry'

Until the late 1980s, the former South Korean tobacco monopoly KT&G was focused on the protected domestic market. The opening of the market to foreign competition, under pressure from the U.S. Trade Representative, led to a steady erosion of market share over the next 10 years. Drawing on company documents and industry sources, this paper examines the adaptation of KT&G to the globalization of the South Korean tobacco industry since the 1990s. It is argued that KT&G has shifted from a domestic monopoly to an outward-looking, globally oriented business in response to the influx of transnational tobacco companies. Like other high-income countries, South Korea has also seen a decline in smoking prevalence as stronger tobacco control measures have been adopted. Faced with a shrinking domestic market, KT&G initially focused on exporting Korean-manufactured cigarettes. Since the mid-2000s, a broader global business strategy has been adopted including the building of overseas manufacturing facilities, establishing strategic partnerships and acquiring foreign companies. Trends in KT&G sales suggest an aspiring transnational tobacco company poised to become a major player in the global tobacco market. This article is part of the special issue ‘The emergence of Asian tobacco companies: Implications for global health governance’.

The Taiwan Tobacco and Liquor Corporation: To 'join the ranks of global companies'

Until the late 1990s, the Taiwan Tobacco and Liquor Corporation (TTL) focused almost exclusively on serving the domestic market as a highly protected monopoly. This paper describes how the company has adopted a more outward looking strategy since 2000, with ambitions to become a regional, and eventually global, business by 2021. Drawing on company documents and industry sources, the paper argues that this shift in strategy was a direct reaction to the decline in domestic market share following liberalisation of the Taiwanese tobacco market and adoption of tougher domestic tobacco control measures. Market opening occurred as a result of pressure from the U.S. Trade Representative in the 1980s, as well as World Trade Organization membership in 2002. It is argued that TTL’s efforts to globalise operations have been limited by bureaucratic company management and structures, and ongoing political tension between Taiwan and China. However, the relative success of TTL’s alcohol branch, and potential détente as the Taiwanese government reaches out to improve relations with China, may provide TTL with new opportunities to achieve its goal of becoming a regional player with global ambitions. This article is part of the special issue ‘The Emergence of Asian Tobacco Companies: Implications for Global Health Governance.’

The globalisation strategies of five Asian tobacco companies: a comparative analysis and implications for global health governance

The global tobacco industry, from the 1960s to mid 1990s, saw consolidation and eventual domination by a small number of transnational tobacco companies (TTC). This paper draws together comparative analysis of five case studies in the special issue on 'The Emergence of Asian Tobacco Companies: Implications for Global Health Governance.' The cases suggest that tobacco industry globalisation is undergoing a new phase, beginning in the late 1990s, with the adoption of global business strategies by five Asian companies. The strategies were prompted foremost by external factors, notably market liberalisation, competition from TTCs and declining domestic markets. State protection and promotion enabled the industries in Japan, South Korea and China to rationalise their operations ahead of foreign market expansion. The TTM and TTL will likely remain domestic or perhaps regional companies, JTI and KT&G have achieved TTC status, and the CNTC is poised to dwarf all existing companies. This global expansion of Asian tobacco companies will increase competition which, in turn, will intensify marketing, exert downward price pressures along the global value chain, and encourage product innovation. Global tobacco control requires fuller understanding of these emerging changes and the regulatory challenges posed by ongoing globalisation.

The China National Tobacco Corporation: From domestic to global dragon?

The China National Tobacco Corporation (CNTC), which produces one-third of the world's cigarettes, is the largest tobacco company in the world. Over the past 60 years, the CNTC has been focused on supplying a huge domestic market. As the market has become increasingly saturated, and potential foreign competition looms, the company has turned to expansion abroad. This paper examines the ambitions and prospects of the CNTC to 'go global'. Using Chinese and English language sources, this paper describes the globalisation ambitions of the CNTC, and its global business strategy focused on internal restructuring, brand development and expansion of overseas operations in selected markets. The paper concludes that the company has undergone substantial change over the past two decades and is consequently poised to become a new global player in the tobacco industry. This article is part of the special issue 'The Emergence of Asian Tobacco Companies: Implications for Global Health Governance'.