Galloping into China

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Hog-tied in the U.S. by a shrinking market and a powerful antismoking lobby, the Marlboro Man is setting his sights on roomier pastures—China. TIME has learned that Philip Morris is set to begin making the world's best-selling cigarette in the largest tobacco market anywhere. China's more than 300 million smokers bought 1.75 trillion cigarettes last year, but due to government restrictions, foreign sales accounted for only around 5% of the total.

The yet-to-be-announced joint venture with the Longyan Cigarette Factory in southeastern Fujian province will make Marlboros for the domestic market. Production, slated to begin by year's end, is expected to exceed two billion cigarettes in the first year. Late last month, Philip Morris technicians spent a week adjusting machinery at the Longyan factory, according to an industry consultant familiar with the deal.

Philip Morris appears to have won a race with British American Tobacco, which in July announced "approval from the highest authorities" for a $1.5 billion China plant, only to be dressed down later by China's all-powerful State Tobacco Monopoly Administration (STMA). Apparently, the STMA was left out of the loop and the deal hit a wall. The Marlboro Man will need a surer grip to grab this bull by the horns.