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.

Related article: Kunming: Bong city, PRC

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

Nice pull, dude.

First-time visitors and new arrivals to Kunming typically have a lot of questions. One of the most common questions is: "Why are people smoking bongs everywhere?"

Throughout Yunnan province, many people spend quite a bit of their day smoking locally-grown tobacco -- Yunnan is the main producer of China's tobacco -- out of their yantong (烟筒), the Chinese name for the bong. And it's not just country folk doing this (although they dig it the most). Government officials and businesspeople also like to puff Yunnan's finest from their plastic bongs.

Even though Yunnan is somewhat famous for the loads of cannabis growing wild throughout the province, we've never seen locals do anything with their yantongs other than smoke lit ciggies or loose tobacco bought at local dry goods markets.

Bongs can be part of the guanxi process when doing business in Kunming. One source with a foreign-owned company in town said he once bonged some tobacco with a municipal official who was adamant that he try some Yunnan tobacco in the local way. An American businessman returning home after a business trip to Kunming last year had a bit of explaining to do at US Customs when they asked him about the large aluminum yantong he was carrying. It happened to be a gift from a provincial official and he was allowed to keep it.

The Yunnan bong phenomenon is good for a laugh, but if you're actually going to try and bong some tobacco, be forewarned: Yunnan tobacco is quite strong, and smoking it from a yantong will likely knock you on your ass.

Tags: 18 Stranges, bongs, tobacco