Tobacco giant penetrated Asian markets via smuggling and political influence

Nov 29 2004

British American Tobacco (BAT)'s strategy for global expansion combined complicity in smuggling with high level political influence across Asia, new research reveals.

A series of papers published in the journal Tobacco Control, based on analysis of previously secret internal BAT documents, reveal extensive evidence, both of the critical role of contraband in corporate strategy and the company's oversight of widespread smuggling activities across Asia, and its attempts to undermine health policy. The papers look at BAT's activities over the past two decades during which transnational tobacco companies have expanded into Asia's emerging markets as traditional western markets have declined.

The papers have been co-written by tobacco control policy experts from the London School of Hygiene & Tropical Medicine (LSHTM) in an international collaboration with other researchers. The documents used are being made available through the Guildford Archiving Project, efforts that are improving public access to millions of pages of documents from BAT.

The articles published today explore the strategies used by BAT to pursue rapid growth in key Asian markets, raising serious questions about corporate conduct:

• The first comprehensive analysis of cigarette smuggling in Asia highlights the critical importance of contraband to BAT's regional strategy. This illicit trade has enabled BAT to enter closed markets, to undermine health regulation, and to earn huge profits. The company's documents demonstrate how BAT aimed to carefully manage the availability of smuggled cigarettes while maintaining sufficient separation to allow deniability.
• In China, where the government maintained a firm grip over foreign investment and imports of international cigarette brands, BAT exploited contraband to circumvent import quotas. Documents also show how the company sought to undermine the World Health Organization's Tobacco Free Initiative in China, and to influence China's participation in negotiations for WHO's Framework Convention on Tobacco Control (FCTC).
• Documents detail how BAT identified Cambodia as an attractive target for investment as the country emerged from civil war in the early 1990s. The company viewed Cambodia as strategically valuable in facilitating contraband activities in the region. BAT has also exploited the country's minimal advertising restrictions and sought to prevent advances in tobacco control legislation.
• In Thailand, tobacco companies collaborated to undermine government efforts to require full disclosure of cigarette ingredients. The documents indicate the successful exercise of political influence within the highest levels of government in Thailand and among key embassies.
• In Indonesia BAT has sought to compete with the locally dominant manufacturers of clove-based cigarettes (kreteks). Attempts were made to adapt the image of BAT brands to appeal to Indonesian women. Efforts to develop a kretek-like product were eventually withdrawn amid fears of exposing the company to charges of double standards.

Jeff Collin of LSHTM, who co-authored all of the new papers, comments: "BAT has sought to reverse the impact of long term declines in smoking rates in Europe and North America by aggressively targeting developing countries. Asia is the key to the company's future prospects, and its own documents highlight the dubious tactics used to accelerate its progress in the region. Importantly, the documents also provide a powerful resource for developing effective policy responses to such tactics."