China
Crackdown by Hong Kong customs nets illegal cigarettes worth HK$57 million
Customs officers made this year’s largest seizure of contraband in the city on Tuesday, with an estimated value of HK$7.3 million
Contraband cigarettes worth more than HK$57 million have been confiscated by Hong Kong Customs in 12 cases of tobacco smuggling from the mainland so far this year, a customs official said on Wednesday.
Details were revealed by assistant superintendent Lau Yuk-lung ,who heads the Customs division investigating illicit cigarettes, after customs officers made this year’s largest seizure of contraband in the city on Tuesday.
The HK$7.3 million haul was discovered when officers intercepted a Hong Kong-bound container truck at Man Kam To Immigration Control Point. The import document claimed it carried more than 800 cartons of assorted goods such as metalware and clothes.
“When the container was opened for inspection, illicit cigarettes were found stashed in 160 cartons,” the assistant superintendent said.
He said initial investigations showed the consignment was intended for local consumption.
The Hong Kong driver, 28, was arrested and the truck was impounded. The driver was released on bail pending further investigations.
Lau believed the seized cigarettes were intended to supplement the illegal market after customs officers seized HK$3.8 million worth of illegal cigarettes from another cross-border truck at Lok Ma Chau border checkpoint on July 20.
“We are still investigating whether there is the same cigarette-smuggling syndicate behind the two cases,” he said.
The two cases were among 12 cross-border tobacco smuggling incidents uncovered by the Customs and Excise Department so far this year. Eleven people were nabbed in connection with the 12 cases.
Lau stressed that there was no evidence to indicate that there was an increasing trend of illegal trade of untaxed cigarettes in Hong Kong. “The situation is under control,” he added.
Meanwhile, customs officers mounted a city-wide operation against illegal cigarettes over the past two weeks.
During the operation, 47 suspected tobacco traffickers and buyers, aged from 14 to 82, had been rounded up with the seizure of HK$150,000 worth of contraband cigarettes recovered. Officers also uncovered eight warehouses used to store 450,000 illicit cigarettes worth HK$1.2 million across the city, and arrested seven people.
Under the Dutiable Commodities Ordinance, the maximum penalty for selling, buying or dealing with illicit cigarettes is a two years’ imprisonment and a HK$1 million fine.
Lau said they would continue to carry out stringent enforcement against illegal cigarette smugglers.
Members of the pubic are urged to call Custom’s 24-hour hotline on 2545 6182 to report suspected illicit cigarette activities.
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Source URL: http://www.scmp.com/news/hong-kong/law-crime/article/2001877/hong-kong-customs-crackdown-nets-illegal-cigarettes-worth?edition=international
Police bust gang which made illegal tobacco-making machines
http://www.shanghaidaily.com/metro/society/Police-bust-gang-which-made-illegal-tobaccomaking-machines/shdaily.shtml
SHANGHAI police have busted a seven-member gang which produced and sold illegal tobacco machines nationwide, Shanghai Television reported yesterday.
In China, tobacco production and sales are strictly under state control.
In May, local police were tipped off about a suspect surnamed Zhai in Jiading District.
Over the next two months, police discovered that Zhai and other gang members had an assembly of tobacco-making machines and sold them to other provinces like Fujian, Liaoning and Guangdong.
Police eventually busted the gang on July 12 in Shanghai and Fujian Province and seized 19 tobacco machines.
According to police, the gang had been running the business since October 2014. They bought the machine parts from other places and hired people to assemble them in Jiading. These machines were sold at prices ranging between 250,000 yuan to 400,000 yuan.
A machine of this kind can produce 2,000 cigarettes a minute. In a year, it can produce cigarettes with a value of 10 million yuan.
Model quitter: President Xi Jinping’s decision to give up smoking deserves praise, WHO chief says
http://www.scmp.com/news/china/policies-politics/article/1997897/model-quitter-president-xi-jinpings-decision-give
A compliment from the World Health Organisation chief to President Xi Jinping for quitting smoking will be a boost to tobacco control efforts, now in a vital phase ahead of a national anti-smoking law, observers said.
WHO director general Margaret Chan Fung Fu-chun said last week during an official visit to Beijing that Xi did not smoke any more and that this was “worth praising as a good model”.
Chan did not elaborate on when Xi quit smoking. Past media reports said Xi quit in the 1980s.
“There are about 300 million smokers. President Xi understands the importance of tobacco control,” Chan said.
Her compliment comes as the State Council, the cabinet, is contemplating whether to enforce stricter tobacco controls, and while the government also controls the nation’s tobacco industry, a major source of revenue.
Xi’s stance will be important in deciding which way the government will swing, according to Wu Yiqun, deputy director of the Think Tank Research Centre for Health Development, an anti-smoking group.
“China’s political system means in reality officials from the very top have a big influence,” Wu said.
“Xi’s remarks with Margaret Chan on tobacco control show he is aware of the importance of tobacco control, which is a good thing for a better smoke-free law,” Wu said.
Xi’s smoking habit dates back to his teenage years in the late 1960s when he did hard labour in rural areas of northwestern Shaanxi province, mainland media have reported.
A photo of Xi from 1983, published by Xinhua three years ago, shows him as a young regional party secretary holding a lit cigarette and with a pack of the Lotus brand on his desk.
The picture immediately sparked demand among Chinese smokers for the brand. Lotus stopped production in the 1990s, but a tobacco plant “redeveloped” the brand and launched it on the market in early 2014.
Consumers and dealers alike “queued up” to buy packs, according to a statement issued by the State Tobacco Monopoly Administration the following year.
Xi, however, had quit smoking as early as the 1980s when he was working as an official in Fujian province, the Beijing Morning Post reported last year.
“Smoking is bad for health,” a villager who knew Xi at the time quoted him as saying.
Former leaders Mao Zedong and Deng Xiaoping were known as heavy smokers, and more than half of the men in China have the habit. But there is an increasing awareness of the dangers of smoking.
This is particularly the case in big cities such as Beijing, which has its own regulations banning smoking indoors.
The national law’s first draft in 2014 proposed a ban on smoking in all indoor and some outdoor public areas. This would be in line with the WHO Framework Convention on Tobacco Control, which China has ratified.
The latest draft of the legislation has significantly back-pedalled, with exemptions for restaurants, bars, hotels and airports.
About 100,000 people die in China from passive smoking-related illness each year, the WHO says. About one million deaths were caused each year by tobacco and the number could rise to three million by 2050 if the country did not act, the organisation has warned.
Tobacco control in China was given a boost in 2013, months after Xi took office as president, when a circular from the Communist Party Central Committee and the State Council banned government officials from using public funds to buy cigarettes.
Officials were also banned from smoking when performing official duties.
They are not allowed to light up in schools, hospitals, sports venues, on public transport or at any venue where smoking is banned.
Xi’s wife, Peng Liyuan, a popular soprano, became an ambassador for the Chinese Association on Tobacco Control in 2009.
Public health experts have credited Xi’s sweeping anti-corruption campaign with causing a slump in cigarettes sales growth.
Revenue fell 11.7 per cent from January to May this year compared with the same period in 2015, and profits were down 24 per cent.
Cigarette sales reversed years of growth last year and fell 2.36 per cent.
The industry, however, generated about 1.1 trillion yuan (HK$1.28 trillion) in profit and tax revenue last year, 8.7 per cent more than in 2014.
Additional reporting by Sarah Zheng and Julia Hollingsworth
Up in Smoke: Why China has Banned Foreign Investment in Tobacco
China’s Ministry of Industry and Information Technology (MIIT) recently announced regulations barring foreign investment in the country’s enormous tobacco industry, blocking foreign-invested enterprises and individual businesses from participating in tobacco wholesale, retail, and alternative forms of trading. These new restrictions come on the heels of various government efforts to reduce China’s rampant tobacco use, with middling results to date.
http://www.chinabusinessreview.com/up-in-smoke-why-china-has-banned-foreign-investment-in-tobacco/
By Alexander Chipman Koty
China’s Ministry of Industry and Information Technology (MIIT) recently announced regulations barring foreign investment in the country’s enormous tobacco industry, blocking foreign-invested enterprises and individual businesses from participating in tobacco wholesale, retail, and alternative forms of trading. These new restrictions come on the heels of various government efforts to reduce China’s rampant tobacco use, with middling results to date.
There are more than 320 million smokers in China, making it the world’s largest producer and consumer of tobacco products. While comprising about 20 percent of the world’s population, China is responsible for 45 percent of all cigarettes consumed globally. With an ageing population, a shrinking workforce, and an increasingly prosperous society, China faces mounting pressure to look after the wellbeing of its constituents, but that comes at a significant price.
Tobacco cessation products and healthcare services stand to benefit from increased supervision of the tobacco industry. Although China is moving toward regulation, wavering government commitment because of the industry’s huge profitability and deep-seated use within society stand in the way of stamping out tobacco’s pervasive presence. The country remains a challenging market for tobacco cessation products and services.
Tobacco use in China
Tobacco use is firmly entrenched in Chinese society, with applications ranging from day-to-day use to deeper cultural practices. Usage is starkly divided between the sexes — 68 percent of Chinese men smoke, compared to only 3.2 percent of women. However, all are exposed to the negative health effects of smoking. Ineffective smoking restrictions in indoor and public places such as restaurants and offices means about 740 million Chinese are exposed to secondhand smoke. As a result of widespread tobacco use and the country’s issues with pollution, China has the most lung cancer diagnoses and fatalities in the world.
Social pressure for men to smoke is significant; those who refuse cigarettes are often met with curious looks and the offerer loses face. In China, offering cigarettes is a symbolic way of establishing trust and forming relationships, particularly among strangers. Similarly to the deep-rooted drinking culture among business people, expensive cigarettes and tobacco products are commonly presented as gifts, and there is often pressure to smoke with coworkers and business partners. Compounded with these practices are ill-informed myths and misconceptions about tobacco, including beliefs that Asians are less susceptible to tobacco’s negative health effects, that it is easy to quit, and that smoking is an ancient part of Chinese culture, according to the Lancet medical journal.
Government involvement in the tobacco industry
The Chinese tobacco market is dominated by the China National Tobacco Corporation (CNTC), a state-owned enterprise (SOE) that is responsible for 98 percent of all cigarettes sold in China. The CNTC owns more than 900 brands, from large ones such as Hong Shuangxi, Yun Yan, and Zhongnanhai, to smaller regional brands and derivatives. The CNTC’s state monopoly has made the penetration of foreign brands largely unsuccessful, and only a small number of them have been manufactured in China. Foreign companies are only able to manufacture and sell their tobacco products through a joint venture with the CTNC. For example, Marlboro, one of the world’s largest tobacco brands, only started manufacturing in China in 2008 after coming to an agreement with the CNTC to promote Chinese brands overseas.
Government restriction of foreign competition is largely explained by tobacco’s extraordinary profitability. Further, restricting foreign companies’ access to China increases the CNTC’s leverage to access international markets and compete with established brands. An incredible 7-10 percent of all government revenue is through tobacco sales, giving the State Tobacco Monopoly Administration (STMA) vast power. Chinese Premier Li Keqiang’s younger brother headed the STMA until February 2015, demonstrating its stature. While the long-term costs of medical services and premature losses of workers is higher than immediate profits, it is difficult for the government to jettison a steady source of revenue by committing to tobacco dissuasion at a time when other streams are slowing.
The uneven implementation of recent reforms points to this reluctance. The government issued a draft law for public consultation in late 2014 banning smoking in all indoor places and some outdoor ones, as well as restricting advertising, and in 2015 raised taxes on wholesale cigarettes from 5 to 11 percent. However, the government ultimately backtracked on many of its initial proposals, allowing restaurants, bars, hotels, and airports to have smoking sections and allowing smoking in individual offices. Combined with infrequent enforcement of existing restrictions, the laws do little to dissuade smoking.
The tobacco cessation market
Government efforts to discourage smoking, however halfhearted, combined with China’s massive smoking population offer immense but difficult-to-grasp potential for tobacco cessation products.
Tobacco cessation products encounter a variety of challenges when attempting to penetrate the Chinese market. Nicotine patches are the most popular cessation product in China; other products with varying degrees of scientific credibility that are also used include e-cigarettes, toothpaste, cigarette holders, and Chinese medicines. Product use is low. In 2014, Johnson & Johnson stopped selling its leading Nicorette product there due to poor sales. Other companies like Pfizer and Novartis have entered the Chinese market calculating a long timeframe before costs can be recovered. Despite the lack of profits, foreign pharmaceutical companies face relatively little competition, as Venturepharm is the only Chinese company producing tobacco cessation medication.
Although e-cigarettes are often marketed as an anti-smoking product, many dispute this, arguing that they are just as bad, or even worse than regular cigarettes. Regardless, there is little awareness of e-cigarettes in China, and those who use them generally do so as a fashion statement. While about 90 percent of the world’s e-cigarettes are made in the southern city of Shenzhen, almost all are exported to foreign markets. The e-cigarette industry is currently unregulated, but the National Health and Family Planning Commission has stated its intent to regulate production, sale, and use of e-cigarettes.
The disappointing performance of tobacco cessation products is in part explained by high costs. E-cigarettes in China are decidedly more expensive than regular cigarettes, and a full round of medication costs upward of RMB 2,000. The deeper cause of the tobacco cessation industry’s poor performance is the lack of awareness and desire for smokers to quit. Fewer than 25 percent of Chinese adults understand the specific health hazards of tobacco use. Additionally, fewer than 10 percent of Chinese smokers quit by choice, in comparison to more than 50 percent in many high-income countries where there are more former smokers than smokers.
Observations
China is slowly addressing its tobacco problem. In 2015, cigarette sales in China declined for the first time in two decades, demonstrating some success in smoking dissuasion. However, this is mostly due to higher taxes curtailing frequent use, rather than reducing the number of individual smokers.
As is commonplace for foreign investors doing business in emerging economies, the specter of SOEs such as the CNTC often complicates business. Vested interests ranging from pure profits to sprawling bureaucracies and payrolls to corruption in the form of kickbacks make it difficult for foreign companies to compete with SOEs who benefit from preferential treatment. This phenomenon has tragic consequences in China’s tobacco industry, where the state’s lucrative monopoly hinders efforts to curb tobacco use, resulting in exploding cancer rates and premature deaths.
While China presents an enormous opportunity for tobacco cessation products, success will be difficult to achieve without genuine government efforts to spread awareness of tobacco’s adverse health effects. With growing healthcare costs and productivity losses, however, China is gradually moving toward tighter control of tobacco use. Although China is not yet primed for tobacco cessation products, it is a question of time before the public comes to grips with the ramifications of its smoking habit, making it essential for producers to create an entry strategy.
About the author: This article originally appeared in China Briefing, a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please emailchina@dezshira.com or visit www.dezshira.com.
Tobacco Consumption in China Falls
http://sino.co.uk/2016/06/23/tobacco-consumption-in-china-falls/
In a victory for Government health policies, tobacco consumption in China has fallen for the first time in over 20 years.
The Financial Times reports that there’s been a fall of 2.4%, although the Chinese market remains enormous, accounting for 45 percent of all cigarette sales in the World.
China’s Government has recently been proactive in enforcing smoking bans in municipal spaces, and has increased tobacco duty from 5% to 11%.
Meanwhile, City A.M. has contrasted the decline of tobacco sales in China with a growing market in Europe.
The paper also reported that the worldwide growth of vaping products has slowed.
Cigarette market sees 2.4 per cent volume decline
http://www.tobaccojournal.com/Cigarette_market_sees_2_4_per_cent_volume_decline.53649.0.html
Cigarette sales fell in the world’s largest tobacco market in 2015 for the first time in two decades, according to research by Euromonitor International.
The country’s cigarette market lost some 60 billion sticks last year, Shane MacGuill, head of tobacco research at Euromonitor, said. He attributed the decline to wholesale tax hikes, increased government control on production and greater health awareness in some regions.
“We do not see 2015 as a one off with the Chinese market now projected to lose about 5% of its volumes between 2015 and 2020,” MacGuill said.
Flavored E-Cigarettes Being Marketed For Younger Population In China
E-cigarettes are the lesser of two evils when compared to its smoking brother– tobacco cigarette. For decades, we push people to quit and to help them control their addiction and then e-cigs were created to asset with that. But in China, it’s the other way around as people use e-cigs to actually lure in children to the habit of smoking.
The situation is worsening as China doesn’t have law in regulating ecigarettes.
Manufacturers are starting to present e-cigs to the younger population as a trend called “vaping”. They have a new target market with women, who has only 3% of China’s smoking population and it seems like they’re eyeing children as well.
China is currently the largest producer and consumer of tobacco. More than half of their men population smoke, which since then, started early in life. The countries average age for people who starts smoking is under 11 years old.
“Some campaigners worry that e-cigarettes are gaining popularity in China before awareness of tobacco’s dangers has become widespread,” reads the report.
Different flavors has been created to cater to the youngsters for a cheap cost of 15-20 Yuan or US $2.5 to 3 in China while more than 8,000 flavors are being marketed in Hong Kong for the same target market.
The group of concerned netizens pushes for a total ban of the product.
Even then, the United States had a heated argument for flavored e-cigs as well “Anyone who has only tried flavored e-cigs and then tries a real cigarette would likely be appalled at how harsh the smoke is and how bad it tastes,” a concerned netizen said while other said that “candy flavored e-cigs are designed to addict a new generation to nicotine.”
Smoking is highly associated to emphysema, lung cancer, prostate cancer, infertility, heart conditions, liver and renal diseases, gangrene and even more health problems.
Comprehensive ban sought on tobacco ads, promotion in China
http://health.asiaone.com/health/health-news/comprehensive-ban-sought-tobacco-ads-promotion-china
Public health and tobacco control activists called for a comprehensive ban on all forms of tobacco advertising and promotion in the nation’s advertisement law, which is being revised.
In the publicized draft amendment to the current law, which took effect in early 1995, media including radio, TV, movies, newspapers, websites and magazines are banned from advertising tobacco products.
“That leaves loopholes for the tobacco industry sneaking into emerging new media platforms like WeChat,” said Liang Xiaofeng, deputy director of the Chinese Center for Disease Control and Prevention, on Monday.
Other new forms of advertising include napkin boxes in restaurants, playing cards and seat covers in airplanes.
Wu Yiqun, deputy director of Think Tank, an NGO that is committed to greater controls on tobacco and smoking, agreed with the call for a comprehensive ban. “The method of listing media platforms should be abandoned. Instead, all forms of tobacco advertising should be banned in the new version of the law,” Wu said.
That’s in line with the WHO Framework Convention on Tobacco Control, which took effect in China in 2006 after the government ratified it in 2003, Wu said.
The convention requires a comprehensive ban on all tobacco advertising, promotion and sponsorship. It also demands signatory countries to introduce legislation to ensure the implementation of the convention’s legal obligations.
However, in China’s current draft amendment, “the ban is somewhat partial”, Wu noted.
Tobacco advertising is not banned in public areas such as shopping malls, supermarkets, Internet bars and public restrooms, she added.
So the tobacco industry is “intruding into these places”, she said, citing tobacco product retailers in particular.
“They do a lot of on-site promotions like new product tasting,” she said.
That is not covered in the draft amendment at all, said Xu Guihua, deputy director of the Chinese Association on Tobacco Control.
A recent survey conducted by China CDC found that nearly 49 per cent of Chinese students ages 13 to 15 reported having seen tobacco advertisements in recent months.
Additionally, 2 per cent said they have received free cigarettes distributed by tobacco companies, mostly at retailers, the CDC said.
Xu noted that so far, 41 countries worldwide had introduced an advertising and promotion ban for tobacco retailers.
Liang Xiaofeng said: “Young people are particularly susceptible to tobacco advertising. Therefore, banning tobacco advertising helps prevent the young from taking up smoking.”
A study conducted in 22 countries indicated that a comprehensive advertising ban would help reduce tobacco consumption by at least 6.3 per cent.