Chinese Throw Open the Doors to Firm Responsible for their Cigarette Addiction(A)

What goes around comes around. This tired, old clich‚ came to mind when I read over the summer that the British American Tobacco Company is being allowed to build a cigarette factory in China after 52 years of exile. Since China is the world’s biggest cigarette market, that’s no mean achievement for BAT. Eat your heart out, Philip Morris.
The Chinese are indefatigable smokers. Two-thirds of Chinese men smoke cigarettes – and the habit is gathering momentum among Chinese women. The government apparently does little to warn people about the consequences of smoking. Indeed, the Chinese government derives a significant share of its tax revenues – the Financial Times puts it at 10% – from the tobacco industry.
And how did the Chinese become such big cigarette smokers? Well, to be frank, it was the British American Tobacco Company that did the trick. They moved into China 100 years ago, bringing the new cigarette-making machines invented by a North Carolinian, James Bonsack. A Bonsack could roll tobacco into paper at the rate of 10 million cigarettes a day.
It was an auspicious time, at the turn of the 20th century, to sell cigarettes in China since it coincided with a vigorous anti-opium campaign. The Chinese, by the millions, turned in their opium pipes for cigarettes – and it was BAT that orchestrated this switch. They built plants in Shanghai, Hankow, Mukden and Harbin. They used trains, camels, mules, carts, wheelbarrows and men’s backs to reach every corner of China. Historian Sherman Cochrane detailed BAT’s advertising blitz in his 1980 book, “Big Business in China: Sino-Foreign Rivalry in the Cigarette Industry, 1890-1930”:
The BAT advertising system left no region of China untouched. In 1905 in Manchuria, for example, BAT put up two thousand large paper placards and two hundred large wooden or iron signboards in the city of Ying-kvou – creating an effect that reminded an American journalist of the sensational billing that the Barnum and Bailey circus arranged in advance of its arrival in American cities. In North China a newspaper correspondent in Kaifeng reported in 1907 that the “whole city has been placarded with thousands of staring advertisements.” In the Southeast, according to a report from the British consul in Foochow in 1909, BAT drummed up business by “preaching the cult of the cigarette and distributing millions gratis so as to introduce a taste for tobacco.”
It worked. Between 1902 and 1920 Chinese consumption of cigarettes zoomed from 1.2 billion a year to 25 billion – and BAT was racking up profits of $7.6 million in China, one-third of its total earnings.
So BAT is now returning to the scene of the crime. Having addicted the Chinese to cigarettes, it’s coming back to reap the benefits of its pioneering. It will take a couple of years to get its factory up and running, but eventually it will be turning out 100 billion cigarettes a year – that’s more than double the annual consumption in the UK and about equal to Italy’s yearly intake. Still, it will account for only 5% of the Chinese market.
One of the first brands off the production line will be State Express 555, which was said to be the favorite brand of Chairman Mao Zedong. Watch for those billboards when you go the 2008 Olympic Games in Beijing.