As if there were not enough members of the Shanghai faction on the standing committee of the Politburo, the city has just acquired Zhongnanhai - for nothing.
A spokesman for the Shanghai Tobacco Group (STG) said yesterday that it had obtained ownership of the Beijing cigarette plant, which produces Zhongnanhai, the most popular blended cigarette in China that is named after the compound where the leaders of the Communist Party work.
'China's tobacco sector is at the point of being opened up,' he said. 'We must pay close attention to foreign multinationals. We must take action now and reorganise our own industry, co-operate with foreign companies and make ourselves stronger.'
Both companies belong to the State Tobacco Monopoly, which controls the production, distribution and sale of cigarettes in China and decided on the takeover. Since it is the parent of both, no money changed hands in the transfer.
A spokesman for the Beijing factory said the takeover was in line with official policy.
'It is part of the national strategy to resist foreign cigarettes,' he said. 'It is the bringing together of good state assets.' STG, set up in 1993, is one of the mainland's biggest tobacco companies, with production last year of 1.38 million cases and brands such as Zhonghua, Panda, Shanghai, Red Double Happiness and Peony.
Zhonghua is the king of Chinese brands, selling for about 30 yuan (HK$28) a pack, and is exported. The British company Gallaher markets it in Europe and travellers can buy it at London Heathrow's airport duty-free shops.
The company has 27,000 retail outlets in Shanghai.
Like other tobacco groups, it has diversified, taking stock in 80 companies in industries such as commerce, foodstuff, real estate, finance, insurance and hotels.
At the end of last year, its net assets reached 19.9 billion yuan and its profit last year was 5.06 billion yuan.
Lifan cigarettes deal - B3
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