BREAKING THE OLIGPSONY:

CHINA-BRAZIL TOBACCO STRATEGIES AND THEIR DEVELOPMENTS ON THE TOBACCO PRODUCTION CHAIN IN BRAZIL

Abstract

This paper analyzes the strategies adopted by China Brasil Tabacos (CBT), a subsidiary of the state-owned China National Tobacco, to overcome barriers to entry in the Brazilian tobacco production chain, as well as the implications of this insertion on the productive dynamics and integration relations of the tobacco sector. This exploratory research, with a qualitative approach, is based on bibliographic and documentary research, in addition to unstructured interviews with rural producers, agricultural technicians, and managers of transnational companies in the sector. The scarcity of analyses on Chinese activity in the Brazilian tobacco production chain justifies this research. The results indicate that, to circumvent the oligopolistic-oligopsonistic configuration of the sector, CBT adopted acquisition strategies based on offering prices higher than those practiced by traditional companies and forming joint ventures with already consolidated companies that possess an integrated production base and established know-how. The entry of the Chinese company has contributed to altering the productive dynamics of the sector, expanding the negotiation possibilities for producers and, albeit partially, putting pressure on the existing oligopsonistic structure, with impacts on the economic organization of the tobacco supply chain.