Posted on 17th Feb 2011 @ 10:49 PM
British American Tobacco has sealed a ground-breaking factory deal in Vietnam, visited by deputy chairman and Conservative MP Kenneth Clarke on company business in June.
BAT, the world's second largest tobacco group, has won consent to join state-owned cigarette maker Vinataba in building a leaf processing plant in southern Vietnam.
The deal, the first between Vinataba and a foreign firm, will also see BAT help upgrade Vietnam's nascent tobacco-growing industry.
Friday's announcement comes two months after Mr Clarke, currently challenging Iain Duncan Smith for Conservative leadership, visited Vietnam on behalf of BAT.
The trip, which prevented Mr Clarke from attending the state opening of the UK parliament, was condemned by anti-smoking protesters, fearing the impact BAT could have in Vietnam.
BAT on Friday denied that Mr Clarke's visit was connected with the Vinataba deal.
"Kenneth Clarke had nothing to do with it," a company spokeswoman told BBC News Online.
"He was there as a member of the firm's audit committee, attending a regular meeting which, by co-incidence, happened to be in Vietnam.
"He did not meet Vietnamese government officials."
The Vietnam tie-up is aimed primarily at bringing Vietnam's tobacco growing industry up to international standards, "leveraging off BAT's expertise in environmentally-sustainable tobacco cultivation", the firm said in a statement.
But the $40m deal, which comes two weeks after BAT became the first foreign cigarette maker to break into South Korea, will also help establish the firm as a "long term player" in the Vietnamese market, the company spokeswoman said.
BAT has already signed deals with three local manufacturers over brands including Craven A, which the company said last month had achieved particularly strong local sales.
The firm also distributes State Express 555 cigarettes, a brand revered as almost an alternative currency in Vietnam, and a favourite of former leader Ho Chi Minh.
The Vietnamese are among the world's most enthusiastic smokers, with the country's 80 million people consuming 58 billion cigarettes a year.
But while almost 72% of Vietnamese men smoke, just 5% of women admit to the habit, figures released last year by the American Cancer Society claimed.
BAT's enhanced presence in Vietnam could see the number of female smokers show a rapid increase, pressure group Action on Smoking & Health (Ash) said.
"In other countries we have seen tobacco firms targeting women as a growth market," Ash spokeswoman Amanda Sandford said.
"They use methods such as recruiting girls to promote cigarettes in nightclubs."
Overall, Friday's deal was "very disturbing news", which Vietnam might eventually regret.
"There may be short term gains in terms of inward investment," Ms Sandford said.
"But in the long term it represents a pretty poor prospect for the local population in terms of their health."
From BBC News