Philip Morris to make Marlboros in China

Source from:  Thomas Mulier | Bloomberg News Posted December 27, 2005  12/28/2005

Philip Morris International plans to link up with China's state-owned tobacco company to make Marlboro cigarettes in that country and sell them nationwide, entering the world's largest and most protected tobacco market. The venture will also produce some Chinese brands and distribute them across the world, Philip Morris International and the China National Tobacco Corp. said. Marlboro is the U.S. company's biggest brand. China consumes more than 1.8 trillion cigarettes a year, more than twice the amount of cigarettes Philip Morris International produces worldwide and a third of the world's total. The country has blocked attempts by foreign tobacco companies such as British American Tobacco PLC to enter the market. The venture will probably start in the first half of 2006, according to the two companies. They don't expect any "material impact on their immediate financial results." Philip Morris International is based in the Swiss city of Lausanne and owned by Altria Group Inc. British American Tobacco last year announced plans for a venture with China Eastern Investment Corp. to build a factory capable of making 100 billion cigarettes. China's State Tobacco Monopoly Administration, which claims jurisdiction over all projects, still hasn't approved the plant or any new production. The Asian country has 360 million smokers, according to Jonathan Fell, an analyst at Morgan Stanley. Altria's rivals have also tried to enter China. Imperial Tobacco Group PLC has an alliance with the Yuxi Hongta Group to distribute West brand cigarettes in cities such as Beijing and Shanghai. Enditem