Analysis of Circulation Competitiveness of Yunnan Tobacco Enterprise in China

With the development of supply side structural reforms, circulation of tobacco products is controlled by strong administrative intervention and inhibited by the serious local protectionism under the national monopoly system. In this paper, it does empirical research by principal component analysis and partial least squares method based on the data of X tobacco enterprise in Yunnan province in order to analyze the relevant factors affecting its circulation competitiveness. It finds that the human capital and research have significant influence and restricted by internal structure of capital and external environment. Therefore, the purpose of this paper is to enhance the circulation competitiveness of tobacco enterprise, relieve local protectionism, and achieve effective circulation of tobacco products based on limited regulation. In addition, it provides references for the improvement of other industries’ circulation efficiency, which is also beneficial to the improvement of circulation competitiveness for the whole industry. Keywords—Tobacco Enterprise; Circulation Competitiveness; Principal Component Analysis; Partial Least Squares I. RESEARCH BACKGROUND In regard to the 19th National Congress reports, General Secretary Xi re-emphasized the structural reforms on the supply side. However, China has been carrying out the national tobacco monopoly system, which strictly controls the circulation and the sales of tobacco products. It will inevitably affect the circulation competitiveness of tobacco enterprise. After joining the WTO and signing the Framework Convention on Tobacco Control, the tobacco products from worldwide will enter into the Chinese tobacco market. The domestic tobacco enterprises are also facing the requirement of controlling the quantity of tobacco products and the improvement of their quality. It also will join the competition that challenging the global tobacco market. In addition, due to local finance’s reliance on tobacco taxes which is mainly from local tobacco enterprises, serious local protectionism does exist. In fact, Tobacco Monopoly Bureau (company) is entirely responsible for China’s tobacco circulation. Although the bureau controls huge profits, it lacks incentive factors in some respect due to the administrative centralization, resulting in a relatively weak circulation competitiveness. In terms of circulation, there is a big gap between the local tobacco enterprises and the multinational tobacco companies after the opening of the domestic tobacco consumption market. Nowadays, there are few researches on the circulation competitiveness in China and the research on circulation competitiveness of tobacco enterprise is rather limited. The research in this paper will make up for this deficiency and further improve the empirical research methods of circulation competitiveness. Due to the characteristics of tobacco products, samples obtained by investigation and statistical yearbook are fewer. In addition, there is multicollinearity among influence factors. Therefore, based on the investigation of X tobacco company in Yunnan Province and data of relevant statistical yearbook, this paper chooses the principal component analysis and partial least square method to study the influencing factors of the circulation competitiveness of tobacco enterprises. This paper aims to alleviate the impact of tobacco circulation regulations, continuously promote the circulation competitiveness of China’s tobacco enterprises, as well as stimulate the vitality of the tobacco product market so that it can fully and timely meet the requirements of tobacco consumers while competing with international tobacco brands. The research on the circulation competitiveness of tobacco enterprises also provides reference for other industries, especially for areas with serious administrative intervention, and ultimately promotes the overall improvement of China's circulation efficiency. II. LITERATURE REVIEW Pearson (1901) proposed the concept of principal component analysis (PCA), which was then extended by Hotelling (1933) to the case of random vectors. Partial least squares (PLS) was first proposed by Wold and Albano (1983), followed by Wold (1989, 1989, 1992) proposing partial leastsquares regression, second-order polynomial partial leastsquares regression, and spline partial least two. Multiplicative regression, Helland (1990) studied the statistical model of the PLS algorithm (mainly PLS1) and found that it is similar to the data interpretation method of the factor analysis method. Qian Daocui (2002) introduced the principle of principal component analysis and the dimensionless processing, mean processing and “logarithmic centralization” of the data processing. Zhang Peng (2004) discussed the principal component analysis comprehensively and compared other * Corresponding author. This paper is funded by “Research on Farmers’ Producing Behaviors under the Regulation of Yunnan Tobacco” (2017FD125) & “Research on Circulation Competitiveness of Yunnan Tobacco Enterprise”