“We are just keeping the business running for China Tobacco’s sake”: when state monopoly meets consumption downgrade

A Chinese tobacco shop owner offers a rare window into China’s state tobacco monopoly as oversupply and shrinking demand reshape the industry.

Written by: Tucker Jiang

Edited by: Kevin Schoenmakers & Yaling Jiang

Production: Rongrong Zhuge

For decades, selling cigarettes was one of the surest ways to make money in China.

As long as shop owners continued to buy whatever the country’s sole cigarette maker, China Tobacco (HKG: 6055), assigned to them, their license would be upgraded. The higher the tier, the more cigarettes they would be assigned — including premium brands, the most lucrative cigarettes.

With many Chinese customers being heavy smokers, and China Tobacco being the same entity as its regulator, State Tobacco Monopoly Administration, there was virtually no threat to this steady source of income. Licensed retailers were in such a desirable position that they were considered prime marriage material. China Tobacco, meanwhile, provided the government with a good chunk of revenue.

Newly arrived cigarettes from China Tobacco wrapped in plastic. Source: Douyin

All that changed in 2025.