Donskoy Tabak, one of the Russian largest tobacco companies, may produce cigarettes in Russia under the brand names of China's state-owned Hongta Group, Kommersant business daily reported on Friday.
The Chinese company may launch production of its cigarettes under Hongtashan, Yuxi and Hongmei brand names using production capacity at Donskoy Tabak in Russia's south. The parties could come to agreement by July 1, Donskoy Tabak head, Ivan Savvidy, told the paper.
"We have the capacity to produce about two billion cigarettes per year for Hongta at the initial stage, but in future volumes may be increased by restructuring our brands," Savvidy added.
Hongta Group, which could occupy 0.5 percent of Russian tobacco market, declined to comment to Kommersant.
Donskoy Tabak could raise its output to 10 billion cigarettes per year for the Chinese firm using spare capacity. A future production launch will be a partnership test phase for the two companies, while Hongta's ultimate goal is to acquire a Russian tobacco producer, the Russian Tobacco Media Group Chief Editor Maksim Korolyov told the paper.
November 2011 media reports suggested that Savvidy wanted to sell his company, estimated to be worth $200 million. Chinese and South Korean companies as well as Britain’s Imperial Tobacco were named among potential bidders.