In order to further research cutting-edge technology and to help smokers reduce their reliance on cigarettes and other traditional tobacco products, British American Tobacco has recently invested in China for the first time to seek technology companies that can help them develop new products.

David O’ Reilly, head of the company’s R&D department, stated that “China is a country that has been growing for a long time and has developed a lot of actual cutting-edge technologies, which help us to get in touch with the technological ecosystem there and get better development.”

The company began investing in China Materialia Venture Capital Fund earlier this year. The fund also has attracted investment from major global multinationals including Samsung, General Electric and BASF. He did not disclose the scale of his investment, but considering the size of the fund (400 million yuan/ 46 million pounds) and the number of investors, it may be as high as 5 million pounds.

BAT hopes that the fund will help itself find the companies with the most advanced R&D strength in China for the development of so-called “next generation” products. This is a significant decision that the tobacco giant made during the continuous decline in traditional cigarette sales. At present, more than 90% of the world's electronic cigarettes and heatde tobacco devices are developed and produced in China. There are about 500 manufacturing enterprises, most of which are concentrated in Shenzhen and Dongguan. Yun Xi, as one of the over 500 manufacturers that develop and produce heatde tobacco devices, has recently received increasing attention from many media and consumers around the world.

As the world's largest listed tobacco company, British American Tobacco acquired part of Renault at US $49 billion. This acquisition strengthens BAT’s access to the US market where electronic atomizers and heatde tobacco products are gaining popularity. About 22 million people have already used these products in the United States.

According to O’ Reilly, British American Tobacco lags behind Philip Morris International in terms of revenue earned by tobacco heating products. However, BAT’s new products also earn about 500 million pounds in 2017 and it is expected to reach 5 billion pounds by 2022. There are about 10 million smokers in the UK, 3 million of which are expected to use the new tobacoo products.

BAT’s next generation products are currently sold in 13 markets. The company hopes to double sales in 2018.