GUANGZHOU, June 13 (Xinhua) -- A Chinese beverage company has signed an agreement with a South African partner to produce bottled herbal tea with the aim of competing with soft drink giants such as Coke and Pepsi.

Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine CompanyLimited and the FHC Group in South Africa signed a 20-million-U.S.-dollar deal to set up a bottling plant and promote the beverage in Africa, said Li Chuyuan, general manager of the Chinese company based in the southern Guangdong Province.

Zhang Junxiu, director of the Guangdong Provincial Food and Drug Industry Association, said the move is a milestone for promotion of bottled herbal teas. He says overall production of bottled tea surpassed Coca Cola in China last year.

Another Guangdong tea bottler company is planning to set up plants in Brazil, said Zhang.

Bottled, chilled herbal tea has become increasingly popular after being marketed as a healthy alternative to sugar-laden sodas. The tea drinks are said to reduce "nei huo" or internal body heat and are better at quenching thirst.

Herbal tea was included on the China's Intangible Heritage list last year.

There are thousands of small herbal tea companies in Guangdong.

Li Chuyuan said his company was optimistic sales of herbal tea in Africa will take off as the beverage has become increasingly popular on the continent.