China's state-run tobacco monopoly reached an agreement Wednesday with Philip Morris Incorporated (PMI) for the licensed manufacture of the Marlboro brand of cigarettes in China.
The China National Tobacco Corporation (CNTC) would also set up an international joint venture with PMI to market Chinese-brand cigarettes abroad, said a joint press release by the two companies.
"The agreements signed today with PMI will allow us to exert our strengths and create significant opportunities for sustained long-term mutual growth and commercial success on a global scale", said Li Keming, deputy chief administrator of the State Tobacco Monopoly Administration.
The Marlboro brand, owned by PMI, will be produced under license at CNTC's affiliate factories and will be distributed by CNTC's official distributors nation-wide in China.
Trial production began last year in anticipation of the agreement, with formal production expected to begin in early 2006.
"Our objective for co-operation with CNTC is to build a long-term global strategic partnership and the signing of these two agreements today constitutes an important and meaningful step in that direction," said Andre Calantzopoulos, chief executive officer of PMI. "As soon as we have received the necessary world-wide regulatory approvals, we look forward to realising the unique promise offered by this partnership over time."
The international joint venture company will be based in Lausanne, Switzerland with each side controlling a 50 percent stake.
The joint venture company will offer consumers a comprehensive portfolio of Chinese heritage brands globally, expand the export of tobacco products and tobacco materials from China, and explore other business development opportunities, the release said.
Some 36 percent of China's population, or 350 million people, are smokers and world tobacco giants are eagerly awaiting a slice of the action.