Tobacco giant waiting in the wings

China's largest tobacco products maker, Hongta Group, signed a 10-year co-operation agreement with the world's number four producer, Imperial Tobacco, to begin production of the "West" cigarette brand in China.

Imperial also agreed to market Hongta's cigarettes overseas and will invest US$8.4 million per year in the project despite tobacco JVs not being allowed in China at this time.

As China's market prepares to open up to foreign competition, the State Tobacco Monopoly Administration (STMA) has unveiled plans for a massive restructuring to fold all provincial companies into three to five national tobacco groups.