There are more Chinese smokers than ever before

International tobacco firms are pushing to sell more cigarettes in China, home to one in four of the world's smokers.
As they come under pressure from the anti-smoking lobby elsewhere in the world, foreign tobacco companies could earn vast profits in a market that has so far remained mostly closed to them.

"Even a small share of the market for any of the big multi-nationals would be quite considerable," admits Dave Betteridge, spokesman for London-based British American Tobacco (BAT), the world's second-largest cigarette maker.

But even if they are allowed to sell more cigarettes to China's 350 million smokers, foreign firms will find that attitudes in the country are changing.

Despite a deeply entrenched smoking culture in China, the government is committed to reducing the number of smokers.

In 2005, it signed up to the World Health Organisation's Framework Convention on Tobacco Control, which aims to reduce the number of smokers across the world.

Anti-smoking campaigns are also being organised ahead of next year's Beijing Olympic Games, which both the Chinese government and the International Olympic Committee want to be smoke-free.

Although big tobacco firms play down their enthusiasm for breaking into China, the numbers show why this is such an important market.

About 1.8 trillion cigarettes are smoked in China each year.

Taxes paid by Chinese smokers in 2005 totalled a staggering $31bn (£15.4bn), more than enough money to pay for the government's $27bn, five-year plan to provide free education to all schoolchildren.

And although the proportion of the population who smoke has fallen, population growth means the absolute number of smokers increased by 30 million from 2002 to 2006, according to WHO figures.

Mary Assunta, chair of the anti-smoking group Framework Convention Alliance for Tobacco Control, says China is also attractive because the government has historically not controlled smoking.

"China remains a goldmine for tobacco companies; that's why foreign firms are keen to get into the market. The sky's the limit," she says.

In order to tap into this market, foreign tobacco firms employ a range of tactics, such as forming joint ventures with the China National Tobacco Corporation (CNTC), which controls the cigarette industry in the country.

Philip Morris International signed a deal with CNTC two years ago to make Marlboro cigarettes in China. Imperial Tobacco and Gallaher, two other major tobacco firms, have pursued similar deals.

BAT, which has tried to set up a joint venture in China, is still in talks with the Chinese about expanding sales there.

Foreign tobacco firms have also been accused of encouraging the smuggling of their cigarettes into China, although that is a charge they flatly deny.

But despite their best efforts, international companies face severe restrictions on the number of cigarettes they can sell in China.

The World Trade Organisation says the Chinese tobacco market is a strict monopoly, with "rigid control over production, marketing and trade".

Last year, BAT sold 689 billion cigarettes across the world, but only 1.2 billion of those were in China.

And if they did gain entry, tobacco firms would have to fight a growing awareness among Chinese people about the risks associated with a habit that kills one million smokers here each year.

Forty-year-old Beijing van driver Guan Zhicai says he is gradually trying to stop because he realises he could be harming himself and those around him who breathe in his second-hand smoke.

Many public areas across the country now shepherd smokers into purpose-built spaces that seem designed to discourage the habit.

In Shenzhen airport's giant terminal building, smokers have to crowd into tiny rooms if they want to light up.

Most of this attitude change is driven by the government, which began anti-smoking campaigns in earnest last year.

Earlier this month, the Chinese health ministry asked for opinions about its plan to ban smoking in taxis, buses, trains, waiting rooms and other public spaces.

There is currently a partial ban on cigarette advertising, although the government has committed itself to extending that over the next five years.

But campaigns to reduce the smoking rate in China will take years before they lead to a meaningful reduction in the number of smokers.

In the meantime, international tobacco firms will be doing their best to sell their products here.

In the words of BAT spokesman Dave Betteridge: "Does China have great potential in the future? Yes."