Confusion over BAT's China deal

13 April 2012

A LANDMARK deal by British American Tobacco to build an £800m cigarette factory in China was mired in confusion today, after the country's tobacco monopoly saying it has not approved the project.

Last Friday, BAT said the project, part of its plan to exploit the world's biggest cigarette market, had government approval. It would be the first foreign firm allowed to manufacture on the mainland.

But a State Tobacco Monopoly Administration official said the deal had not been cleared.

'We have issued an internal document which clarifies that we have not approved any Sino-foreign cigarette joint venture,' the official said. 'Under China's tobacco regulations, we're the only ones who can grant approval for such joint ventures.'

Despite this, BAT was sticking to its earlier statement.

'We have received approval from the highest authorities,' said BAT spoke swoman Ann Tradigo.

The joint venture factory with local firm China Eastern Investments would be BAT's biggest plant in a potentially lucrative market. It is designed to produce 100bn cigarettes a year, more than total consumption in Britain.

The Chinese smoke about 1.8 trillion cigarettes a year.

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