Two Chinese tobacco companies will merge to form the world’s fourth-largest cigarette producer by volume, AP reported, citing a report in the 21st Century Business Herald. The newspaper said Hongyun Group and Honghe Group have signed a letter of intent to merge. The newspaper cited Li Weidong, an executive of their parent company, China Tobacco Yunnan Industrial Corp. A deal between Hongyun and Honghe would require approval from China’s State Tobacco Monopoly Administration. The two companies, both based in Yunnan province, refused to comment. Last year, the two companies produced a combined 230 billion cigarettes. Only three tobacco companies – Philip Morris, British American Tobacco and Japan Tobacco – produced more. China has 350 million smokers, more than any other country.