british american tobacco hong kong - Tackling illicit trade

For many manufacturers, counterfeiting and smuggling are major issues. We work hard, in liaison with the Government of the Hong Kong Special Administrative Region and customs authorities, to try to eliminate contraband products.

However, only governments can tackle these effectively, through reasonable and sustainable taxation policies, improved border controls, adequate laws and effective enforcement measures.

When consumers light up smuggled or counterfeit cigarettes, keen to save money, they may be unwittingly helping to fund international organised crime and terrorists.

This is just one serious problem associated with the trade in illicit tobacco – a trade which is already a global problem and set to grow.

Worldwide, British American Tobacco fully supports regulators, governments and international organisations such as the World Customs Organisation, the World Trade Organisation and World Health Organisation in seeking to eliminate all forms of illicit tobacco trade.  

The black market is driven by ever higher taxes, particularly when taxes and therefore prices in neighbouring countries are much lower.  Weak criminal penalties, poor border controls, low arrest rates and corruption in some parts of the world add to the problem.

We see it as vitally important that governments establish workable tax regimes and economic policies that do not create conditions for illicit trade, with strong border controls and effective laws to combat it.

Counterfeit

Sometimes fakes can be almost impossible to tell from the real thing.  Another problem is ‘look-alike’ cigarettes, where the criminals mimic an original design with some changes.  For example, British American Tobacco's State Express 555 brand may be copied but the numbers changed to 999.  Consumers may think it’s just a new variant.

Badly made and poor tasting counterfeits may also be riskier to health than genuine product.  They are unlikely to comply with the rigorous regulatory standards that we adhere to for tar, nicotine and carbon monoxide levels and they might contain unapproved ingredients.

The vast majority of fakes come from illegal operators in China, then Paraguay, the Middle East and to a lesser extent Eastern Europe.

Raids by the authorities do take place but many operations are small, highly mobile and difficult to trace in remote areas.  The makeshift factories, where the cigarettes are usually packed by hand, are often underground and can vanish within hours.

Crime and reward

Illicit trade is not just the work of small operators. Organised crime is increasingly dominant. The rewards can be high.  A single 40 foot long container (8.5 million cigarettes) smuggled into the UK and sold at half the recommended retail price could net the criminals around US$1.5 million in profit.

Interpol, the international police organisation, says gangs that traffic drugs, arms and people are also behind the illicit cigarette and alcohol trade.  The US Department of Justice says some also have ties to terrorist organisations.