TOKYO (Reuters) - Japan Tobacco said on Wednesday it hoped to catch up with Philip Morris International in smokeless tobacco by expanding the number of smoke-free restaurants and public places that allow its vaping product.

Tobacco firms see Japan as a test ground for vaping products, as e-cigarettes using nicotine-laced liquid are not allowed under the country's pharmaceutical regulations.

While Marlboro maker Philip Morris's heat-not-burn "IQOS" tobacco device is already enjoying strong demand in Japan, Japan Tobacco's launch of its "Ploom Tech" product has run into delays due to production shortages.

Japan Tobacco, a former state monopoly still a third owned by the government, will start selling Ploom Tech at its flagship shops on Thursday and 100 tobacco stores on July 10 in Tokyo. The company has said it plans to sell it nationwide in the first half of the next year.

The company test-launched the product in southwestern city of Fukuoka in March last year and at its online shop. It had to temporarily suspend sales after demand overwhelmed supply. Japan Tobacco said it had sold 250,000 Ploom Tech devices by the end of last year.

Unlike Philip Morris's IQOS, Ploom Tech does not directly heat tobacco leaves. Instead, the battery-powered device generates vapor that goes through a capsule packed with tobacco leaves.

Japan Tobacco said the mechanism produces less smell than "heat-not-burn" products, and the company hopes it will be a strong differentiating factor against rivals. It said Ploom Tech emits smell a five-hundredth of a conventional cigarette.

The company said about 80 smoke-free restaurants, cafes and other public places in Fukuoka allow the use of Ploom Tech. In Tokyo, there are about 120 such facilities, it said.

"The number of smoke-free places that allow Ploom Tech is increasing," Chito Sasaki, president of the company's Japanese tobacco business, told reporters.

(Reporting by Taiga Uranaka; Editing by Stephen Coates)