China National Tobacco Corporation (CNTC) is a state-owned monopoly and the world’s largest producer of cigarettes and tobacco leaves. CNTC has been working collectively with the Chinese Communist Party (CCP) to expand its global reach since the 1990s by establishing subsidiaries, tobacco farms, and retail markets across the world. Initially, CNTC expansion took place through joint ventures with other transnational tobacco companies, later advancing independent operations as a supply chain as part of the Belt and Road Initiative (BRI).
CNTC provides tobacco products to 316 million domestic smokers and produces 2.5 trillion cigarettes annually. Some of its biggest subsidiaries are the Hongta Tobacco Group, Hongyun Honghe Group and the Shanghai Tobacco Group. While all of these companies produce cigarettes for the Chinese market under a variety of brands, CNTC also has a number of other subsidiaries that produce cigarettes for sale in other countries.
In 2003 and 2017, CNTC signed two deals between CNTC subsidiary Yunnan Tobacco and Imperial Brands. These agreements enabled CNTC to expand farming, manufacturing and sales operations into at least 16 other countries across the world. CNTC heavily relies on a network of international farming subsidiaries to support the production of tobacco products. China exported over $486 billion of unmanufactured tobacco leaf to U.S., while it depends on imports of tobacco leaves annually of 100 million kgs from Argentina, Brazil, Kazakhstan, Malawi, Zimbabwe and Zambia.
Moreover, CNTC collaborated with academic researchers only to train its employees to advance its research agenda, by culturally promoting the “safe consumption of tobacco”, which would allow CNTC to grow its base internally, as it heavily relies on academic institutions to propagate tobacco as safe. Furthermore, to legitimise the propaganda, the company has sponsored and donated millions of financial aid to build schools named after cigarette brands that normalise the consumption of tobacco.
CNTC’s recent expansionism strategy was flagged ‘ethically dubious’ by multiple independent think tanks and governments, which also accused the company’s activities to be outright illegal. CNTC is also accused of smuggling tobacco to avoid the international tax drain and has flooded international markets with illegal Chinese cigarettes brands to increase its customer base. Ongoing research and investigation reports have outlined a map of CNTC’s illegal activities since 2013, whereby China tobacco has exported millions of illegal cigarette brands to Ukraine from its European factory. The shipment contained ‘Regina Blue’, and ‘Regina Red’ brand cigarettes and had no tax stamps on them. These specific brands are manufactured by CNTC.
A bust of smuggled tobacco products in Naples revealed a network of Italian and Moldovan smugglers, some linked to organised crime, who were exclusively working with CNTC. The cigarettes were ostensibly sold to an Iraqi firm called “Devmak Company”, one of China Tobacco’s top buyers, and the company was paid by smugglers. China Tobacco’s European branch export records show CNTC was shipping large numbers of cigarettes to this company. China Tobacco International Europe Company (CTIEC) has been accused of smuggling cigarettes into conflict zones including Libya, Syria, and Iraq. The Chinese cigarettes have also ended up in a free trade zone at the mouth of the Panama Canal also popularly known as “The Disneyland of smuggling.” After tracing the origins of these contrabands found in Colombia led to a trail of shell companies leading all the way back to CNTC.
CNTC’s illegal smuggling of its cigarette brands by flooding the international markets in a bold attempt to have them legalised and tax the brand. In an infamous case in Colombia during the 1990s, when Marlboro cigarettes illegally flooded the markets, the government was somewhat forced to legalise its legitimacy since stopping the smuggling completely was not a comprehensive approach back then. Apart from bold attempts of smuggling tobacco, CNTC is shifting production overseas. Brazil has become a major supplier, with farmers trapped in debt working under difficult conditions to grow tobacco for Chinese cigarettes. Moving production abroad is just another stepping stone towards implementing its Belt and Road Initiative Strategy. As the world’s largest and second-biggest tobacco producer, Brazil is an important country for CNTC’s global expansion.
CNTC’s subsidiary company, China Tobacco International (CTI), when filed for a Hong Kong initial public offering played a major key role in CNTC’s expansion into Brazil’s Tobacco Industry. The listing enabled CTI to purchase tobacco leaves from Brazil at $100 million for a unit. CNTC also launched a subsidiary ‘China Brazil Tobacos Exportadora’ (CBT), which has largely escaped the government’s scrutiny of labour standards violations. Labour abuses, as well as extreme debt and diseases, have long been known struggles of Brazil’s tobacco industry. CNTC’s expansion doesn’t stop at Latin America but it further expands towards Africa, looping in its Belt and Road Initiative Strategy. Despite being under multiple scrutiny and battling accusations of engaging in illicit trade activities, CNTC continues to grow rather quickly.
