Hongyun Group and Honghe Group, two of Yunnan province's largest tobacco companies intend to merge, a move that will form China's largest and the world's fourth-largest cigarette producer by volume, according to Chinese media reports.

The planned merger, which is still awaiting regulatory approval, suggests a move towards consolidation in China's highly fragmented tobacco industry. China is the world's largest producer and consumer of cigarettes, with a market of more than 300 million smokers, a market that is still growing.

If the merger goes through, the new company is expected to be the world's fourth-largest cigarette producer after Philip Morris International, British American Tobacco and Japan Tobacco Inc.

Yet in terms of revenue, the two companies' combined 2007 revenues are less than 30 percent of the revenue of current number four Imperial Tobacco Plc, partially because cigarettes in China are some of the cheapest in the world. According to their websites, in 2007 Hongyun Group posted 29 billion yuan (US$4.2 billion) in revenue and Honghe took 16 billion yuan.

The proposed company would be named Hongyun Honghe Tobacco Group Company Limited (红云红河烟草集团有限责任公司) and would have production facilities in Kunming, Qujing, Honghe, Zhaotong, Huize in Yunnan province, plus facilities in Xinjiang.

After the merger, the company would produce several of China's larger cigarette brands, including Yunyan, Honghe, Hongshancha, Shilin and Lesser Panda.

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Tags: business, health, Honghe, Honghe Group, Hongshancha, Hongyun Group, Lesser Panda, Shilin, tobacco, Yunyan

In the wake of major IPOs by state-owned PetroChina and Alibaba, big Chinese companies are highly visible in business news stories around the world. As Yunnan's economy continues its rapid growth, one may wonder which local companies have the best chance at joining their coastal counterparts in global headlines.

According to a recent ranking of Yunnan's top 100 companies by the Yunnan Provincial Enterprise Association, tobacco giant Hongta Group is ranked the province's 'strongest' company, with annual operating revenue of more than 40 billion yuan (US$5.5 billion).

As with much of China's lesser-developed regions, Yunnan's biggest companies are almost exclusively guoqi (国企), or state-owned enterprises. The emergence of home-grown private enterprises joining the ranks of the province's top companies still seems many years off.

The following list of Yunnan's top companies includes each company's annual operating revenue and primary business - not surprisingly, companies involved in tobacco, mining and energy dominate the list:

1. Hongta Group (红塔集团): 40,798,100,000 yuan; tobacco

2. Yunnan Copper Group (云铜集团): 32,690,420,000 yuan; copper/nonferrous metals

3. Hongyun Group (红云集团): 25,644,350,000 yuan; tobacco

4. Yunnan Power Grid Co (云南电网公司): 23,299,000,000 yuan; power generation/transmission

5. Kunming Iron & Steel Company (昆明钢铁控股有限公司): 16,539,360,000 yuan; ferrous metals

6. Sinopec Yunnan (中石化云南石油分公司): 16,000,000,000 yuan; petroleum/petrochemicals

7. Yuntianhua Group (云天化集团): 15,217,980,000 yuan; chemicals, fertilizer

8. Honghe Cigarette Factory (红河卷烟总厂): 14,500,000,000 yuan; tobacco

9. Yunnan Metallurgical Group (云南冶金集团): 14,240,180,000 yuan; non-ferrous metals

10. Kunming Rail Bureau (昆明铁路局): 10,015,840,000 yuan; rail logistics

Tags: Alibaba, business, Honghe Cigarette Factory, Hongta Group, Hongyun Group, Kunming Iron & Steel Company, Kunming Rail Bureau, PetroChina, Sinopec Yunnan, SOE, Yunnan Copper Group, Yunnan Metallurgical Group, Yunnan Power Grid Co, Yuntianhua Group