China will open its tobacco market to foreign firms at the beginning of 2003 by abolishing the special retail licence for foreign cigarettes and cutting import taxes, Xinhua reported Xu Dan, director of the State Tobacco Monopoly Administration, as saying. Import duties on foreign cigarettes would be reduced to 25 per cent from 65 per cent and vendors would be able to sell local and foreign brands under a single licence.
Meanwhile, several foreign firms are considering setting up production in China, according to Bloomberg. British-American Tobacco has been in talks with a unit of State Tobacco to make cigarettes in Sichuan and Reemtsma of Germany plans to share technology with Yuxi-Hongta Tobacco Group of Yunnan, China's biggest tobacco grower and largest cigarette producer.
China currently has 146 manufacturers producing 1,600bn cigarettes a year, about 38 per cent of world production. The industry contributed Yn115bn in taxes in 2001.