[Intl-tobacco] Time Mag: Philip Morris Galloping into China

[Robert Weissman]

Galloping into China

Philip Morris steals a march on its rivals with a new joint venture in the
Mainland
September 6, 2004
>From the Sep. 13, 2004 issue of TIME Asia Magazine

BY NEIL GOUGH | BEIJING

The world's biggest cigarette brand heads to the world's largest tobacco
market

Hog-tied in the U.S. by a shrinking market and a powerful antismoking lobby=
,
the Marlboro Man is setting his sights on roomier pastures=E2=80=94China. T=
IME has
learned that Philip Morris is set to begin making the world's best-selling
cigarette in the largest tobacco market anywhere. China's more than 300
million smokers bought 1.75 trillion cigarettes last year, but due to
government restrictions, foreign sales accounted for only around 5% of the
total.

The yet-to-be-announced joint venture with the Longyan Cigarette Factory in
southeastern Fujian province will make Marlboros for the domestic market.
Production, slated to begin by year's end, is expected to exceed two billio=
n
cigarettes in the first year. Late last month, Philip Morris technicians
spent a week adjusting machinery at the Longyan factory, according to an
industry consultant familiar with the deal.

Philip Morris appears to have won a race with British American Tobacco,
which in July announced "approval from the highest authorities" for a $1.5
billion China plant, only to be dressed down later by China's all-powerful
State Tobacco Monopoly Administration (STMA). Apparently, the STMA was left
out of the loop and the deal hit a wall. The Marlboro Man will need a surer
grip to grab this bull by the horns.