About one in every three cigarettes smoked in the world is smoked in China. The Chinese have an extensive and relatively historical culture of smoking where 52% of adult male are smokers, about two-third of them starting even before they turn 20. It is an intrinsic part of their socio-cultural fabric, where gifting of cigarettes to friends and even strangers is considered polite.
Given this, it comes without surprise that the most commonly diagnosed cancer in China is lung cancer, becoming the leading cause of cancer mortality in the country. It was still not a problem if the world could dismiss China’s extensive culture of tobacco consumption as its internal matter. Unfortunately, like all things Chinese, it is not that simple anymore. The Chinese government and tobacco conglomerates have been making concerted efforts to expand the Chinese tobacco industry globally, aiming to attain a nearly monopolistic position. The primary player in China’s tobacco expansion is the China National Tobacco Corporation (CNTC).
The CNTC is a state-owned company that holds the world’s biggest market share percentile of 44% of cigarettes sold and consumed globally since 2018. China’s tobacco industry contributes about 7–11% to its government revenue generation which in turn is being used to fund its expansionist agendas, much like all the other Chinese conglomerates crossing borders in an attempt to become major global players. Should the world be concerned with this Chinese tobacco expansion?
There are no official records of CNTC’s profits, where unlike other giant tobacco companies, the former is not subject to any independent audits. The Organized Crime and Corruption Reporting Project (OCCRP), however, has released certain findings, according to which the China Tobacco Control Supervision made announcements pertaining to 1.20 trillion yuan earnings in 2019 (approx. 170 billion dollars).
As per reports garnered by OCCRP, in a 2017 paper, researchers Kelly Lee, Jennifer Fang, and Nidhi Sejpal have pointed out CNTC’s ‘quiet noteworthy’ aggressive overseas expansion. In the paper, the researchers have pointed out that if CNTC continued on the same trajectory, there could be ‘profound impacts for public health on a larger unprecedented scale.
Jennifer Fang in a tobacco conference conducted by John Hopkins went on to explain how CNTC funds think-tanks to spread their propaganda on safer consumption of tobacco. CNTC produces 2.4 trillion cigarettes a year, which is 43% of global output. The company is a huge organization that has a lot of agency power. The powers can be exhibited in three ways, political power; which allows them direct participation in tobacco policy-related discussion, then financial power, and lastly, ideation power; which helps CNTC to
normalize the consumption of tobacco use and propagate corporate social responsibility.
CNTC is currently exporting tobacco products to 125 countries as per the U.N’s Com-trade database. It has set up manufacturing factories in Romania, Indonesia, Myanmar, the Middle East, Africa and South America. They source their raw tobacco from Zimbabwe and Brazil. And as per CGTN and Global Times reports, the CNTC has also signed an agreement with Cuba to boost cigar sales. As per reports, when China announced the Belt and Road Initiative (BRI) — CNTC declared publicly to participate in their country’s best efforts on global dominance. The company, quite clearly, is exploring all possible avenues to extent its global agendas.
CNTC’s subsidiary company is China Tobacco International, which has filed for a Hong Kong initial public offering (IPO). The listing would raise 100 million dollars for the unit to purchase tobacco leaf from Brazil to sell them to Chinese manufacturers. The IPO is showcasing China’s yet another way of international expansion strategy. As per reports collated from multiple sources, the China Tobacco International (CTI) Hong Kong’s responsibilities cover four domains —
- Oversee tobacco Leaf Export (excluding Zimbabwe) from Brazil, Argentina, and North America completely owned by CNTC.
- To oversight the exports of tobacco leaf to South-East Asia, Hong Kong, Macau, and Taiwan.
- To export cigarettes ‘duty-free sale’ in Thailand and Singapore.
- Expand global sales of novel tobacco products and other tobacco devices.
The IPO played a major key role in CNTC’s further expansion with minor help from Hong Kong (an international arm of CNTC). In 2008, CNTC redefined its operations described as, the ‘designated offshore platform of China Tobacco International of capital markets and operations and international business expansion.
Partnerships with other global firms
One of CNTC’s biggest golden egg — was its partnership with ‘Philip Morris International’ in 2005 which allowed Marlboro to manufacture in China and gave CNTC a gateway to an international joint venture company to be established in Switzerland The latter has allowed for massive rebranding of CNTC products globally.
Another example, as reported by OOCRP is CNTC’s European branch, governed by one of its subsidiary companies in Romania, a major contributor to China’s expansion efforts, by ‘China Tobacco Anhui Industrial Co’, based in the eastern Chinese province of Anhui. The rest of the shares are split between ‘China Tobacco Shaanxi Industrial Co.’ and ‘Hongta Tobacco Group Co. Ltd.
These subsidiaries were curated as countermeasures against the WHO Framework Convention on Tobacco Control (FCTC). CNTC studied and examined the impact FCTC would have and came up with a solution such as this. This speaks volumes of to what extent China would go to dodge anybody that tries to come their way.
Taking the illegal route
It has also come to light that some of CNTC’s subsidiaries have also been participating in smuggling illicit tobacco products into the European market, Latin America, and Ukraine.
An investigation conducted by the OCCRP journalists has concluded the findings of a truck carrying 12.5 million cigarettes smuggled from Europe to Ukraine. The cigarettes found were ‘duty-free sale only’ with stamps that were not in Ukrainian. OCCRP cited, CNTC cigarettes are part of a tobacco trafficking ring that moves large consignments from Romania, Belarus, and the UAE into Ukraine to further smuggle them into European Union countries.
They further found evidence of CNTC’s illegal tobacco smuggling in Latin America. The CNTC cigarettes have flooded into countries from Mexico to Ecuador. Most of these CNTC cigarette brands found were Marshal, Golden, D&B, Dubao and Regina Blue and Red.
CNTC, by all means, expanding by illegal tobacco trading to make profits and smuggle illicit Chinese cigarettes is worrisome. With that being said, Brazil has become a major tobacco leaf supplier to CNTC underlying all regulations but discreetly. Before anyone could realise it, the Zimbabwean tobacco farmers found themselves drowning in debt cunningly enforced by CNTC.
CNTC subsidiaries in Zimbabwe loaned the farmers seeds, fertilizers, and chemicals, and provided adequate training on how to cultivate tobacco. All of this is under one condition that the farmers would have to pay back after they sell the crop at the end of the season.
Before the farmers could realise, the price offered to them was cut to half the price they were making in profit by CNTC subsidiary contractors. The company began to provide fewer inputs for their crops and started deducting the same amount from the repayments, which eventually pushed the farmers into debt.
The Zimbabwean farmer’s tobacco sales dropped and they couldn’t repay their loan. CNTC contractors confiscated their tractor, water pump, and other equipment.
Tobacco kills more than 8 million people annually across the globe, about 7 million of them being active smokers. An even bigger problem is the high spread of tobacco smokers across middle and low-income countries, amounting to 80% of the total tobacco smokers[1].
If CNTC is allowed to continue its global spread, unprecedented public health risk might result out of China’s imperial expansionism ideology. CNTC is aiming for a global monopoly on tobacco, casting influence on economies of small nations. This would bear China with a lot of politico-economic power, which could in future result in these countries falling prey to the former’s now well-known debt-trap diplomacy.