Yuxi was a near-bankrupt state-owned factory that made the Hongtashan (Red Pagoda Hill) brand of cigarettes,[3][6] with an annual revenue of less than US$1 million.

[7] Chu recognized that as China's economy was starting to grow, more people could afford cigarettes, and he began to promote the Hongtashan brand all over the country.

[7] He spent the unreported profit on buying state-of-the-art equipment and building new offices and apartments for his employees.

[7] By 1995, the company produced more than 100 billion cigarettes per year but still could not meet the demand even at the higher unofficial prices.

Wholesalers were willing to pay bribes to Chu and his family members to secure supplies of Hongtashan.

[7] While Yuxi Tobacco generated more than 99 billion yuan in profits and taxes for the government during his 16-year tenure,[6] Chu's official monthly salary was less than US$250.

[6][8] He employed the same management methods as at Yuxi Tobacco, such as the emphasis of quality over quantity and linking workers' income to the company's profits.

[5] He used the Internet to market his "Chu Oranges" nationally,[8] and attracted wealthier customers who were willing to pay higher prices for a premium brand perceived as nutritious and safe.