Smoking is not good for the financial health of China Tobacco

China Tobacco International Europe Company SRL (registered in Ilfov) is owned by the following companies registered in China: China Tobacco Anhui Industrial Corporation (62%), Hongta Tobacco Group Co Ltd (Trust) (25,6%) and China Tobacco Shaanxi Industrial Co. Ltd. (12,3%).

According to the company’s website, “China Tobacco International Europe Company, hereinafter referred as CTIEC is the only manufacturing plant of China National Tobacco cigarettes in Europe and so far the largest investment project in Romania owned by the Chinese government. In the CTIEC project of foundation from Romania, the Chinese government has invested a capital of about 40 million dollars, of which China National Tobacco holds 97.50% share”.

The same source indicates ambitions plans for the Chinese cigarette factory in Romania: “Our Company takes Romania’s neighbouring countries, the Middle East, the Balkan countries and North African markets as expanded focus and market base and explores new markets in all areas by drawing upon the experience gained from key points to achieve sequential development. These expansion areas are also gateways for exporting an increasing amount of goods to remote overseas markets in South Eastern and Central Asia, Western Europe, and Southern Africa.”

The Chinese Ambassador to Romania, Jiang Yu, visited the CTIEC factory. Source: ctiec.cc

Until October 2019, 0,76% of the shares of China Tobacco International Europe Company SRL were owned by Lemnking Industry Com SRL (Buzău), company which withdrawn from the shareholding of the cigarette manufacturer after going bankrupt. In turn, Lemnking Industry Com SRL is owned by Shanghai F&J Investment and Management Co Ltd and three individuals, Chinese citizens, connected, in one way or another, to the Chinese group F&J.

At the beginning of 2012, Lemnking Industry Com SRL was mentioned by DNA prosecutors in a case very well-known at the time: an extensive network of corruption in the port of Constanța (see details in the article dedicated to Lemnking), which included a senator and the Secretary General of the Ministry of Interior of that time. The high-profile of the latter was the only thing that kept the Chinese-owned company from being noticed by the media.

Furthermore, F&J, the Chinese group owning Lemnking Industry Com SRL, assumes parentship over China Tobacco International Europe Company SRL, as provided by the group’s website: “In 1997, China Tobacco Corporation, Shaanxi Tobacco Company and F&J EUROPE established the joint venture company in Romania. In 2005, the company increased the investment with three million US dollars, The HONGTA Group, China Tobacco Anhui Industrial Corporation joined as the new shareholders also.”

After years of obtaining profit, fiscal year 2019 was the first year of loss for China Tobacco International Europe Company SRL, as shown by the data of the Ministry of Finance. In year 2017, the company’s net profit was of 9.6 million lei (over 2 million euros), with revenue of almost 77 million lei (almost 17 million euros), with 166 employees. The following year, 2018, the net profit was half of the one gained the previous year – 4.8 million lei (little over 1 million euros), with revenue of 97,6 million lei (almost 22 million euros), with 179 employees. In 2019, the revenue was only 54,3 million lei (over 11 million euros), and the loss was of 7 million lei (1,5 million euros), with 175 employees. Also a relevant indicator, showing that things are not exactly going well for China Tobacco International Europe Company SRL, is debt: in 2017, debt level was 68 million lei (almost 16 million euros); in 2018, it increased dramatically, to over 121 million lei (almost 27 million euros, with 5 million euros more than that year’s revenue), while in 2019 it dropped to almost 97 million lei (20 million euros).

Therefore, the company’s future is not bright: China Tobacco International Europe Company SRL began 2020 with a 1,5 million euros loss from the previous year, debt amounting to 20 million euros and forecasted revenue of only 11 million euros (if nothing changes compared to 2019).

In the recent past, the company has also faced alleged smuggling operations scandals. According to an article published by the press in Satu Mare (county located in the North-West of Romania, on the Ukrainian border), “the Dubliss brand belongs to China National Tobacco Corporation, through the company China Tobacco International Europe Company SRL, registered in Romania. The brand was launched in our country in 2008, being then sold in Russia, and Ukraine respectively. It has been a few years since Dubliss cigarettes with Romanian tax stamp became unavailable in markets in our country. (…) What is interesting is the fact that most (…) Dubliss cigarettes sold in markets in Satu Mare county have Ukrainian tax stamps, a clear indication of the country of origin of those cigarettes.”

 

Read more about the Chinese companies in:

Ukraine

Moldova

Bulgaria