British American Tobacco and cigarette smuggling in China

Jul 18 2006

New research based on the internal documents of one of the world's biggest tobacco companies, British American Tobacco (BAT), suggests that it been complicit in the smuggling of tobacco into China and has benefited from this illicit trade.

Millions of BAT internal documents were made publicly available following a court case in the USA. The researchers, Dr. Kelley Lee of the London School and Hygiene & Tropical Medicine and Dr. Jeff Collin of the University of Edinburgh, have analysed documents, available via the company's Guildford Depository, and online from the BAT Document Archive. In their paper, ‘Key to the future': British American Tobacco and cigarette smuggling in China, which is published in the journal PLoS Mecidine, they present evidence that smuggling has been strategically critical to BAT's efforts to penetrate the Chinese market.

As smoking is declining in the world's richer nations, tobacco companies are seeking to increase sales elsewhere. China is regarded as the ultimate prize among tobacco's emerging markets – one in three of all cigarettes smoked are smoked there and the nation has the largest number of smokers in the world (350 million). It also has one of the world's largest cigarette smuggling problems, a critical public health issue because it stimulates increased tobacco consumption and undermines tobacco control measures.

BAT has stated publicly that it does not approve of smuggling. However, the researchers say the internal BAT documents show that the company has restructured its operations in China expressly to control and expand the contraband trade across Asia. The documents state, for example, that exports from Hong Kong are the ‘key to the future' for BAT, and that the vast majority of BAT's Hong Kong exports were intended for the contraband Chinese market.

According to Dr Lee, the findings clearly show that BAT, despite its efforts to portray itself in public as a responsible company, has been a critical part of the global smuggling problem, rather than an appropriate partner in its resolution.

Dr. Lee adds that, from BAT's own records, ‘…it is clear that contraband has been a hugely profitable and integral part of BAT operations in China over the past two decades. Initially a means of circumventing restricted access to the Chinese market, it became a hugely profitable income stream. Contraband was then used to build market presence, in competition with other brands, with supply and price carefully managed'.

Following concerns raised by the House of Commons Health Select Committee in 2000, BAT's conduct was the subject of a lengthy investigation by the Department of Trade and Industry, an investigation that was abandoned without the findings being made public. Dr. Collin notes, ‘Given the accumulated evidence of complicity in smuggling contained within its corporate documents, it seems both remarkable and disturbing that neither BAT nor any of its directors have yet been held accountable via litigation or public inquiry'.

The paper ends with a call for the broad obligations of the Framework Convention on Tobacco Control, an historic treaty adopted by the member countries of the World Health Organization in 2003, to be enhanced to include a dedicated protocol on the illicit trade in tobacco.