Arts & Culture

36 views

The Changing Role of China in the Global Illegal Cigarette Trade

The Changing Role of China in the Global Illegal Cigarette Trade
of 26

Please download to get full document.

View again

All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Share
Transcript
    http://icj.sagepub.com/  Justice ReviewInternational Criminal  http://icj.sagepub.com/content/22/1/43The online version of this article can be found at: DOI: 10.1177/1057567712436843 2012 22: 43 International Criminal Justice Review  Klaus von Lampe, Marin K. Kurti, Anqi Shen and Georgios A. Antonopoulos The Changing Role of China in the Global Illegal Cigarette Trade  Published by:  http://www.sagepublications.com On behalf of:  Published in Association with Georgia State University, Department of Criminal Justice & Criminology  can be found at: International Criminal Justice Review  Additional services and information for http://icj.sagepub.com/cgi/alerts Email Alerts:  http://icj.sagepub.com/subscriptions Subscriptions: http://www.sagepub.com/journalsReprints.nav Reprints:  http://www.sagepub.com/journalsPermissions.nav Permissions: http://icj.sagepub.com/content/22/1/43.refs.html Citations:  What is This? - Mar 22, 2012Version of Record >>  by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from by guest on October 11, 2013icj.sagepub.comDownloaded from   The Changing Role of Chinain the Global Illegal CigaretteTrade Klaus von Lampe 1 , Marin K. Kurti 2 ,Anqi Shen 3 , and Georgios A. Antonopoulos 3 Abstract This study explores the history of the illegal production, distribution, and smuggling of cigarettes inmainland China. Data were obtained from a content analysis of 931 media reports retrieved fromLexisNexis for the time period 1975 until 2010, and from other open sources. The illegal cigarettetrade first emerged in the form of violations of state tobacco monopoly regulations. In the course of the restructuring of the legal tobacco sector, which occurred under external political pressure toopen the Chinese market to foreign competition, an illegal cigarette industry emerged which at firstprimarily produced fake Chinese brand cigarettes for the domestic black market. At the same time,China became a destination country for smuggled genuine Western brand cigarettes. It was onlyafter effective crackdowns against cigarette smuggling and domestic distribution channels in the late1990s that the Chinese illegal cigarette industry shifted to exporting large numbers of counterfeitWestern brand cigarettes to black markets abroad. China’s current role as a leading supplier of counterfeit cigarettes is a result of the contradictions of the economic reform process and of external licit and illicit forces that worked toward opening up the Chinese tobacco sector to theoutside world. Keywords cigarette smuggling, counterfeiting, black market, illegal market, economic reforms, tobaccoindustry, China 1 Department of Law, Police Science and Criminal Justice Administration, John Jay College of Criminal Justice, New York, NY,USA 2 Fordham University, Bronx, NY, USA 3 Teesside University, Middlesbrough, Teesside, UK Corresponding Author: Klaus vonLampe, Department of Law, Police Science and Criminal Justice Administration, John Jay College of Criminal Justice,899 Tenth Avenue, New York, NY 10019, USAEmail: kvlampe@jjay.cuny.edu International Criminal Justice Review22(1) 43-67 ª 2012 Georgia State UniversityReprints and permission:sagepub.com/journalsPermissions.navDOI: 10.1177/1057567712436843http://icj.sagepub.com  Introduction The illegal trade in cigarettes may well be the most underrated type of transnational crime. It isseldom mentioned in the same breath with drug trafficking or human trafficking or arms trafficking.Yet, in terms of its assumed profitability and global reach as well as in its political and economicramifications, the illegal cigarette trade has taken on similar proportions. In fact, it is assumed thatthe smuggling and illegal sale of cigarettes is seen by criminals ‘‘as an attractive alternative to drugtrafficking because of its lower penalties and large profits’’ (Europol, 2011, p. 24; see also Beare,2002, p. 227; Chow, 2003, p. 475), allegedly attracting crime syndicates as well as terroristorganizations to this illegal business (Shelley & Melzer, 2008). Recent estimates suggest that11.6 %  of the global cigarette market is illicit, resulting in the loss of government revenue of $40.5 billion annually (Joossens, Merriman, Ross, & Raw, 2009, p. 17). A considerable share of thislost government revenue translates into illegal profits (Joossens & Raw, 2002, p. 10). In comparison,the illicit trade in small arms is only believed to have a value of about $1 billion annually (Marsh,2002, p. 220). The illegal cigarette trade comprises a number of different schemes by which excisetaxes and tariffs are circumvented and trademark rights violated, involving the illegal production,smuggling, and illegal distribution of cigarettes (von Lampe, 2011). While previously genuine cigar-ettes dominated the black market, in the past decade, counterfeit cigarettes have gained a significantmarket share, with the People’s Republic of China (hereafter: China) commonly assumed to be themain source country. Based on statistics on the seizure of counterfeit cigarettes (9.28 billion sticks inChina in 2007), it has been estimated that between 93 and 186 billion counterfeit cigarettes are being produced in mainland China annually, which would account for between 1.6 and 3.3 %  of the total(legal and illegal) global cigarette market (Allen, 2011; Joossens et al., 2009). According to another estimate, the number of fake cigarettes produced in China per year is even higher, reaching400 billion sticks (Chen, 2009). China’s importance as a producer of fake cigarettes is underscored  by seizure data from Western countries. In the past decade, up to 83 %  of counterfeit cigarettes seized annually within the European Union and up to 99 %  of counterfeit cigarettes seized in the United States are believed to have srcinated from China (Organization for Economic Cooperation and Development [OECD], 2008).At first glance it would appear that China’s prominent role in the global illegal cigarette market is just another facet in the overall picture of product piracy with China appearing as the arch villain (Lin,2011). This view, however, seems oversimplified. In fact, China’s role in the global illegal cigarettemarket is much more complex and has undergone substantial changes over time. The purpose of thisarticle is to shed light on the history of the illegal cigarette trade in its many variations within Chinaand with its diverse links between China and the rest of the world, beginning in the 1970s when Chinaset out to venture down the path from a state-planned economy to a market economy. Following up ona study of the social embeddedness of Chinese cigarette counterfeiting (Shen, Antonopoulos, & vonLampe, 2010), the aim of this article is to gain a better understanding of the dynamics of the formationand evolution of an illegal market within the context of China as a country in transition. Accordingly,our focus is on mainland China, excluding the former colonies and current ‘‘Special AdministrativeRegions’’ of Hong Kong and Macao. We argue that in order to characterize China’s role in the globalillegal cigarette market, neither the label of villain nor the label of victim is appropriate. Rather, thecase of the illegal cigarette trade as it relates to China shows how contradictions within the process of economic reform combine with external licit and illicit forces to shape a globalized illegal market. Methods and Data There is little previous research on China’s role in the illegal cigarette trade. Existing studieseither deal with more general issues, such as product piracy (Chow, 2003; Hung, 2003; Mertha, 44  International Criminal Justice Review 22(1)  2005), or with more specific issues such as the complicity between particular tobacco corporationsand cigarette smugglers (Lee & Collin, 2006; Lee, Gilmore, & Collin, 2004). Likewise, cigarettetrafficking has received surprisingly little attention in discussions of organized and transnationalcrime relating to China (Chin & Godson, 2006; Chu, 2002; Curtis, Elan, Hudson, & Kollars,2003; Lintner, 2004; Lo, 2008; Wang, 2011). Accordingly, no comprehensive understanding existsof China’s role in the illegal cigarette trade.Research on the illegal cigarette trade in China is confronted with some of the same obstacles thatexist for empirical criminological research in China generally. Data on crime are difficult to accessand impossible toassess because of a lack of transparency of the data collection process, and they arelikely to be subject to manipulations to serve political and other interests (Bakken, 2005; Broadhurst& Liu, 2004; Shen et al., 2010). Likewise, officials have been found reluctant to assist in crimino-logical research out of concerns that it might discredit the Chinese government (Bennett, 2004;Broadhurst & Liu, 2004; Chin & Godson, 2006; Shen, 2005; Zhang, Messner, & Lu, 2007).Furthermore, there are technical restrictions for Chinese and non-Chinese researchers to cover developments that extend across a country divided into 34 provinces, autonomous regions, munici- palities, and special economic zones. Combined with the vast geographical expansion of China and the size of its population, ethnic diversity and differences in the extent and pace of socioeconomicdevelopment contribute to a highly complex context which does not permit generalizations fromresearch conducted in one particular part of the country (Liang & Lu, 2006). At the same time,research on a countrywide scale meets with almost insurmountable obstacles for financial reasonsalone. In addition to these impediments to prospective research, the circumspect attitude of theChinese government have ensured that statistical information is not collected and disseminated,at least not to the extent of other countries (Brewer, Guelke, Hume, Moxon-Browne, & Wilford,1996). In an effort to capture the structure and dynamics of the illegal cigarette trade in China,we therefore draw primarily on an extensive analysis of open sources from within and outside of China. Apart from a general literature and Internet search, we retrieved Chinese and internationalmedia reports from the Lexis-Nexis database of ‘‘Major World Publications’’ for the time period 1975–2010. Casting a wide net with different combinations of a number of alternative search terms(China, Chinese; cigarette; fake, counterfeit, smuggling, smuggled, pirated, illegal, illicit), weinitially retrieved some 7,000 media reports among which eventually 931 relevant reports were iden-tified in a manual screening process. 1 These reports were then coded for types of illegal schemes and geographical scope to obtain a rough overview of major trends and patterns. Subsequently, all rel-evant content from the Lexis-Nexis material as well as from other sources, including Chinese and international websites and the academic literature, was excerpted and entered into seven text data- bases organized thematically and chronologically into a total of 256 conceptual categories for anin-depth qualitative analysis.Media reports have principal limitations as data sources (Barranco & Wisler, 1999; Franzosi,1987; Oliver & Maney, 2000; Woolley, 2000) and the retrieval from databases like Lexis-Nexisis influenced, for example, by the choice of keywords, a process which may lead to the exclusionof reports that are peripherally relevant but may be important for the wider context of the study (Jew-kes, 2011). Still, from the triangulation of the information extracted from the various Chinese and international sources emerges a fairly consistent picture. We are therefore confident that we are ableto identify the main trajectories of the development of the illegal cigarette trade in China and itsinternational ramifications over the past decades. Overview The emergence of China as the main supplier of counterfeit cigarettes can perhaps be best under-stood as the result of three processes where each process, respectively, sets the preconditions for the Lampe et al.  45  subsequent stage of development. However, while each of these processes is characteristic of a par-ticular historic time period, it would be an oversimplification to frame them as distinct phasesappearing in a strict sequential order. It is more appropriate to speak of interlocking and partly over-lapping processes.The first process, initiated in the late 1970s, led to the formation of effective distribution channelsfor illicit cigarettes within China. The liberalization of domestic trade and commerce in the course of the economic reforms launched in 1979 facilitated the marketing of cigarettes either illegally diverted from state-controlled businesses or illegally produced in excess of state-set production quota.The second process pertains to the development of brand consciousness among Chinese smokersand the competition between Chinese and foreign brand cigarettes. In this process, China saw thecreation of an infrastructure for the counterfeiting and the smuggling of popular Chinese and Western brand cigarettes destined for the Chinese black market. Factors that fueled this process,which culminated in the late 1980s through the mid-2000s, included the modernization and regionalconcentration of the legal tobacco industry in China as well as efforts by Western tobacco manufac-turers to establish their brands on the Chinese market by legal and illegal means.The third phase, finally, is characterized by a reorientation of China’s illegal cigarette industrytoward black markets abroad. This development is linked to crackdowns against corruption, smug-gling, and illegal retail markets in China in the late 1990s and also coincides with increasing pressureexerted by governments in Europe on Western tobacco corporations to cease supplying their cigar-ettes to European black markets. The Economic Reforms in China Since 1979 The illegal cigarette trade in China emerged as a significant problem in the context of the reformsinitiated in the late 1970s when the Chinese Communist Party decided to gradually ‘‘open up’’ thecountry to the outside world and to modernize its economy. A broad range of measures were imple-mented from 1979 onward, including the decollectivization of agriculture, the decentralization of fiscal revenues to local governments, the expansion of autonomy of state-owned enterprises, theencouragement of private businesses, and the establishment of a market-based economy. The maincharacteristics include the creation of various special economic zones and the opening up of coastalcities, as well as the promotion of foreign trade and investment (Bell, Khor, & Kochhar, 1993, pp.1–2; Guthrie, 2009; Yuan, 2008). These measures, however, had not followed a coherent design,were introduced gradually and at times only half-heartedly, and not all economic sectors and not all parts of the country were equally affected (Bell et al., 1993, pp. 2–3; Naughton, 2007; Shirk, 1993, p. 14). As a result, the developments in China since the late 1970s have been marked by a number of contradictions. Perhaps the most substantial contradiction is that the economic reforms and the‘‘opening up’’ to the world did not go hand-in-hand with reforms of the political system and theone-party rule of the Communist Party (Shirk, 1993, p. 4). Contradictions also emerged as a resultof the rapid economic development in the special economic zones in southeastern China, namely inGuangdong and Fujian provinces, close to Hong Kong, Macau, and Taiwan, in comparison to therelatively slow progress made in the rest of the country (Broadman & Sun, 1997; He, Wei, & Xie,2008; Reardon, 1996). This process of a desynchronization of economic development on the provin-cial and local level was reinforced by a general trend toward a decentralization of authority fromcentral to local governments (Chien, 2010; Guthrie, 2009). The Legal Tobacco Industry in China Variations in the shape and pace of economic reforms did not only emerge from one province tothe next but also from one economic sector to the other. In fact, although the tobacco sector was one 46  International Criminal Justice Review 22(1)
Advertisement
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks