China’s Anti-Counterfeiting and Anti-Smuggling Efforts
The situation with cigarette counterfeiting and selling as well as smuggling in China has gone through tremendous changes.
By Tobacco China Online
Earlier this year the State Tobacco Monopoly Administration of China (STMA) organized a media team inside and outside the tobacco industry to visit five provinces - Jiangsu, Fujian, Guangdong, Guangxi, and Yunnan - aiming to help the public to have an in-depth understanding of the practice and effectiveness of tobacco anti-counterfeiting and anti-smuggling in some key areas of the country.
New features of HNB-involved criminal activities
New tobacco products have hit the domestic tobacco market in recent years. According to the Tobacco Monopoly Law, HNB (heat-not-burn) products fall under tobacco regulations. STMA in June 2017 clearly identified IQOS, Glo, and other HNB products as tobacco products. In 2018, Jiangsu province investigated and dealt with 14 cases involving HNBs, four of which were multinational network cases.
In reality, criminal activities involving HNB products present new features different from traditional tobacco-related crimes: they are committed by specialized gangs on the internet relying on modern logistics and making it difficult to obtain evidence on the spot.
Based on the “internet + delivery” sales model, the Nanjing branch of STMA adopted an “online + offline” intelligence collection model, in which delivery of tobacco-related information collection and judgment system is developed online, and tobacco inspection, postal management, and corporate liaison officers work together to supervise the delivery offline.
STMA’s Yangzhou branch has focused on the jurisdiction of internet sales cases. According to the judicial interpretations by Supreme People’s Court and Supreme People’s Procuratorate, the agency actively invited public security authorities to intervene in advance to comply with the constituent elements of internet crime cases, effectively resolving the jurisdiction of investigations in different places.
Focusing on evidence identification, STMA’s Lianyungang branch cooperated with public security, procuratorial, and other authorities to collect chat records of suspected criminals on WeChat and QQ, the most-used social media apps in China, as well as online banking transaction records in accordance with legal procedures, in efforts to ensure the smooth development of follow-up judicial procedures with strong evidence.
Concerned with the trend of HNB sales from online to offline, the Suzhou branch explored a new type of supervision by randomly selecting inspection objects and law enforcement inspectors during the supervision process and disclosing the investigation results in a timely manner to the public. This method has expanded the monopoly administration’s coverage and squeezed that of tobacco offenders.
How cigarette counterfeiting areas made a complete transformation
Some villages in Yunxiao county of Fujian province have been engaged in cigarette counterfeiting since the 1990s. The Fujian Provincial Administration carried out one or two special anti-counterfeiting actions every year for more than a decade specifically targeting Yunxiao county. It also worked with public security authorities to carry out anti-counterfeiting in nine cities in the province, rotating no fewer than 30 monopoly inspectors for each activity for no less than 300 days per year.
With the joint efforts of all parties, the anti-counterfeiting situation in Yunxiao has fundamentally improved. From 2016 to present, Yunxiao maintained a clean record, achieving the best situation in anti-counterfeiting work over the past 30 years. Since 2015, Yunxiao reserved annual anti-counterfeiting comprehensive management funds to invest in agriculture and industrial infrastructure construction, greatly changing the appearance of the county. Nowadays, a number of new industries gradually took shape in the area, providing people with employment opportunities.
Guangdong formulates anti-counterfeiting and anti-smuggling system
Different from other regions, tobacco counterfeiting and smuggling activities in Guangdong province can be described as “complete in categories” with obvious geographical distribution characteristics. Zeng Zheng, deputy director of Guangdong Provincial Administration of STMA, said, “There are a large number of logistics express enterprises, especially in the Pearl River Delta region. Fake cigarettes from other provinces and smuggled cigarettes from Vietnam are also transited and distributed here.”
Jieyang city successively cracked down on a number of major cases such as the illegal production of counterfeit cigarettes using pre-intelligence investigation, on-going crackdown, and post-case handling.
Guangzhou significantly increased supervision over logistics stations, postal enterprises, and airports. From 2018 to March 2019, 65 tobacco-related cases were seized in logistics and freight transport stations, and 48 in express link, ensuring that illegally-transported vehicles involved in tobacco have “nowhere to come and go”. From 2016 to 2018, the province investigated and dealt with 116,600 cases involving various types of tobacco, and seized 2.628 billion fake cigarettes, 845 million smuggled cigarettes, 811 sets of large counterfeiting machines, 6638.72 tons of fake tobacco leaves and cut tobacco, and 148 million pieces of fake cigarette trademarks, saving the country about RMB30 billion in economic losses.
Border tobacco anti-counterfeiting and anti-smuggling
Fangchenggang, a port in Guangxi Zhuang Autonomous Region, boasts a long coastline of 537.64 kilometers, separated from Vietnam by the Beilun River, which originates from the port city. It provides easy access to and from the two countries.
The unique geographical conditions and regional environment make the border a high-risk area for tobacco-related crimes. As China always maintains high pressure against tobacco counterfeiting and smuggling, great changes have happened in recent years for the manufacturing selling and smuggling of fake cigarettes. Domestic counterfeiting criminals gradually transferred their base area to bordering Southeast Asian countries, where they opened tobacco factories to produce counterfeit cigarettes and smuggle tobacco leaves and fakes. This highlights the urgency and importance of border anti-counterfeiting and anti-smuggling measures.
In recent years, tobacco smuggling in the border area of Guagnxi between China and Vietnam has been a multi-faceted situation, especially in the Beilun River in Dongxing, Fangchenggang. Guangxi Tobacco Smuggling Corps (GTSC) was formally established in April 2016 and entered Dongxing to push forward tobacco anti-counterfeiting and anti-smuggling.
GTSC successively signed joint memorandums of logistics with relevant law enforcement departments in Dongxing, as well as established a joint anti-smuggling work mechanism. They carried out a series of anti-smuggling operations, which led to a continuous decline in the number of smuggled cigarettes along the Dongxing border.
In Yunnan province, which is known as the Tobacco Kingdom, the illegal circulation and smuggling of tobacco leaves increased sharply since 2018. The inflow of overseas fake cigarettes comes through strict organization and diverse means, which creates great difficulties for authorities trying to fight against tobacco smuggling. However, in 2018, the province investigated and handled 52 cases of manufacturing and selling fake cigarettes, an increase of 13.79% year-on-year.
Industrial transformation improving anti-counterfeiting and anti-smuggling efforts
Industrial transformation brought changes to three villages (namely Taoyuan, Jumu, and Hongxing) in Baishui town, Luxi county, Honghe prefecture, Yunnan province, where illegal tobacco processing used to be a main source of income.
“What we are most concerned about is the rebound of illegal crimes involving tobacco,” said Zhang Hua, deputy mayor of Luxi county. “We have been keeping a close eye on the changes in industrial electricity consumption. The three villages which used up to 130,000 kw/h electricity, have consumed at around 7,000 to 8,000 kw/h at present.”
Luxi county strived to formulate construction programs that encourage industrial transformation and development along with programs for active implementation, defining key tasks that would be implemented from 2018 to 2020, such as the implementation of industrial transformation and development, improvement of human settlement environment, infrastructure construction, rural civilization construction, grassroots governance, and construction of people’s livelihood.
Li Yonggui, a villager of Taoyuan village, is one of the beneficiaries of this industrial development. Before 2013, he was a participant in the illegal processing of tobacco leaves and cut tobacco. Later, he began to make a living under the guidance of the government and tobacco departments. Now, he works for Longwei Agricultural Development, which has 1,100 mu (1mu = 0.16 acre) of fruit-bearing forest and 3,000 mu of vegetable farms. “The fruit-bearing forest will produce economic benefits next year. The vegetable farms created a production value of more than RMB70 million last year with more than 400 people working there. The monthly income of each employee can reach RMB3,000-4,000,” said Li Yonggui.