Yunxiao, the illegal cigarette manufacturing capital of the world

Here is a quick highlight of the longer article here: China’s Marlboro Country

Again from the International Consortium of Investigative Journalists and the Center for Public Integrity, my previous highlights from them is here: The Non-chinese Chinese Cigarette made to be smuggled.

I’ve embeded their video below:

This is a fascinating article that you should read in depth if you have the slightest interest, there is such a wealth of information that it is hard for me to keep the highlights short. Below is part highlights, part Chinese numbers. Enjoy!

This is an article about a very interesting Yunxiao, a city in Fujian. which is home to hundreds of businesses that produce illegal cigarettes.

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Ringed by thickly forested mountains, illicit cigarette factories dot the countryside: carved deeply into caves, high into the hills, and even buried meters beneath the earth. By one tally, some 200 operations are hidden in Yunxiao, a southwestern Fujian county about twice the area of New York City. Over the past ten years, production of counterfeit cigarettes in China has soared, jumping eightfold since 1997 and making China the world leader in fake smokes. Chinese counterfeit cigarette factories now churn out an unprecedented 400 billion cigarettes a year, enough to supply every U.S. smoker with 460 packs a year. Yunxiao — once famed for its bright yellow loquat fruit — is the trade’s heartland: the source of half such production, officials say.

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Officials can only guess at the size of the industry here in the United States, but to give a sense of scale, from 1999-2005, one ring smuggled a billion fake cigarettes into Los Angeles and New Jersey. Fully 99 percent of the U.S. counterfeit market is supplied by China, and up to 80 percent of that in the European Union.

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“Most factories are underground,” confides a Yunxiao cigarette broker in hushed tones. “They’re under buildings, unimaginably well-hidden, with secret doors from the basements.” Even the village temple — topped with a lilting red roof and twisting, frescoed spires — conceals a factory below, she says.

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Lab tests show that Chinese counterfeits emit higher levels of dangerous chemicals than brand-name cigarettes: 80 percent more nicotine and 130 percent more carbon monoxide, and contain impurities that include insect eggs and human feces.

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Here is a preview of what is coming for all those misprintings that you find on Chinese fake goods:

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Back in the 1990s, counterfeit packs from China often came riddled with easy giveaways: misspelled health warnings, blurred lettering. These days, OLAF reports that sophisticated industry forensics are needed to identify China’s counterfeits. In the United Kingdom, where authorities in some areas report that up to one-third of all cigarettes sold are fake, mostly from China, customs officers have deployed a trained dog to try and sniff out counterfeits on the streets.

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I like the prose here:

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As an official from the tobacco company Rothmans once put it, “Thinking about Chinese smoking statistics is like trying to think about the limits of space.” Every year, China’s smokers consume one-third of the world’s tobacco: an overwhelming 2.2 trillion cigarettes. Cigarette-related mortality levels, too, are equally staggering, with fully one-third of all Chinese men under age 30 predicted to die from the pandemic.

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Some other interesting numbers on bribes:

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a friendly $10,000 tribute, one customs official confides, has been the going rate to bribe a container out of the Xiamen ports in recent years. (And even without payment, inspection rates at China’s ports are a low one to two percent)

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The actual business numbers:

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For counterfeiters, the rewards are especially prodigious. According to manufacturers, state-of-the-art cigarette machines (available online from sites like Alibaba.com) can fetch a pricey $1.5 to $3 million. “But everyone knows that the investment can be recouped in just a few months of manufacturing,” says a Yunxiao broker. Some factories boast up to 500 workers and over $100 million in annual sales.

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Consolidation of industry numbers:

[...]Over the past decade, China’s legal cigarette industry has been consolidated, with the number of factories shrinking from 185 to 31 since 2001.[...]

PRC budget comparison:

[...]With cigarette sales accounting for nearly 8 percent of China’s budget in 2007, the state has a strong motive to keep its supply counterfeit-free.[...]