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With the fast development of Internet, e-Business is prospering in the recently five years. Many traditional companies have been convinced of this revolutionary change, and they are exploring a feasible way to adapt to the transition. Chinese companies have weaker bases than the developed countries, but they are also cognizant of the big trend, and are making great efforts to grasp the opportunities. This paper introduces a practical Chinese case that illustrates the increasingly strategic role of e-business applications in traditional manufacturing industries. The company we studied is a large Chinese tobacco corporation, which locates in Shanghai, one of the most developed areas of China. After the WTO entry of China, the regulation system of Chinese tobacco industry will be transformed from STMA (State Tobacco Monopoly Administration) to a more open one. This will bring about more competitive pressures to Chinese tobacco enterprises. How can traditional large corporations adapt to the real new economy in the new environment, it is a big problem that most of the Chinese tobacco corporation faced on. Sensing the challenges and opportunities, Shanghai Tobacco Group Corporation started to search after a new development way, and they intend to develop an e-business application model to improve its distribution processes to integrate their purchasing, manufacturing, delivering, logistics, and sales. Studying such a typical large company , it may be helpful for other large company in other industry.

This paper first reports the background of Chinese tobacco industry and a brief history of the IT applications in Shanghai Tobacco Group Corporation (in the next part we use SHTG for short), then we discusses the environment and business factors that led to the e-business application. Based on the above introductions and discussions, we illustrate an e-business solution to handle the situation SHTG faced.