Hong Kong Seizes 64 Million Suspected Illicit Cigarettes

Hong Kong Customs reported Tuesday the seizure of approximately 64 million suspected illicit cigarettes with an estimated market value of HKD$180 million (US$23 million).

Cigarettes PileThe seizure of 64 million cigarettes, seen here stacked 10 columns high, 32 rows across, now makes 640 million on the year for Hong Kong Customs. (Photo: 2happy, Stockvault, License)In an operation across the Tsing Yi and Kwai Chung districts, authorities took action against a smuggling ring that transported millions of cigarettes through multiple shipping yards,  confiscating six containers packed with the cigarettes.

Photos supplied by Hong Kong Customs show boxes of cigarettes stacked 10 columns high, 32 rows across, with six shipping containers filled to the brim behind them. Police noted that a 40-foot container can hold just over 10 million cigarettes for transport.

It is unclear who supplied them and whether they are genuine or counterfeit. Authorities say the investigation to determine the origin and transport routes of the cigarettes remains ongoing.

Customs officials report that they have now seized approximately 640 million suspected illicit cigarettes this year alone; this figure is 50 percent higher than last year’s total of roughly 427 million.

Authorities say a seizure this big is likely evidence of  illicit cigarette syndicates stocking up on supplies for the holiday season “to ensure a stable supply for the local or overseas illicit cigarette markets.”

Euromonitor International (EI), a strategic market research organization, has documented that the supply of illicit cigarettes outside of China broke the 400 billion threshold as of 2019, a seven percent surge from the year before.

Investigations by OCCRP have further highlighted the role of transnational tobacco companies in smuggling their own product across the globe.

The stories documented that Big Tobacco companies such as Philip Morris International, British American Tobacco, and China’s state tobacco monopoly smuggle or work with smugglers in order to penetrate and retain their markets, avoid taxes, and establish brand loyalty among their users.

Illegal cigarettes can be sold for much less than legal, highly taxed varieties. The black market in these cigarettes deprives governments and revenue authorities of significant income. The 64 million cigarettes, for example, had a reported duty value of roughly HK$120 million ($15.3 million), or 67 percent of their market value.

Inadequate enforcement of cigarette smuggling means syndicates can subvert cigarette import and export laws throughout the continent with few repercussions, according to Maria Lorena Cummings of the Colón Chamber of Commerce in Panama.

Hong Kong authorities arrested three drivers, aged between 50 and 63.

Under the city’s Dutiable Commodities Ordinance laws, anyone convicted of possessing, selling, or buying illicit cigarettes faces a potential maximum fine of HKD$1 million ($127,500) and imprisonment for two years.

The maximum fine would be a fraction of the estimated HKD$180 million value of this week’s seizure.

“It’s such a profitable business that you can take the risk,” Cummings said.