Buying ‘Double Happiness’ Reveals China’s Tobacco Battle

As Gao Jie browses a Beijing tobacco store for Lunar New Year gifts, she sees little to deter her except possibly the price.

The 23-year-old office worker pays 240 yuan ($39) -- more than a day’s average wage in the Chinese capital -- for a carton of locally made Shuangxi (or “Double Happiness”) cigarettes. The package is wrapped in shiny red paper with gold writing and bears no graphic reminders that tobacco use is the biggest killer in China. Only a note in plain type at the bottom of the pack warns that “smoking causes harm to health.”

“My father feels very proud when he can say ‘my daughter bought these for me in Beijing’ when passing out cigarettes to his friends,” Gao said, clutching the purchase she plans to take on the 11-hour train ride to her family in Dalian.

In the war against tobacco in China, the world’s largest cigarette market, the toughest battle happens at Lunar New Year. As countries from Canada to Australia intensify warnings, raise taxes and remove logos from packs, China has balked at tarnishing the image of cigarettes, the most commonly exchanged gift during the week-long holiday, which begins Saturday. That’s helped preserve tobacco’s prestige and served to promote the addictive habit, blamed for 1 million deaths in the country each year.

Tobacco presents a dilemma in China, also the world’s biggest producer of the aromatic leaves. The State Tobacco Monopoly Administration, the industry regulator, runs the world’s biggest cigarette maker, China National Tobacco Corp. Even male doctors, 60 percent of whom smoked in 1996, find exchanging cigarettes to be a sign of professional and personal success, a 2011 study in the Journal Tobacco Control found.

Hard to Refuse

Smokers find it hard to quit because it’s difficult to refuse offers of cigarettes from others, and taking offers of cigarettes is one of the most frequently cited reasons for initiating smoking, according to the research, which was supported by the National Cancer Institute.

Cigarettes are given as gifts in many societies and were frequently exchanged in the U.S. from at least the 1930s before falling out of favor in the 60s. British American Tobacco Plc and Philip Morris International Inc. studied the culture of gifting and offering cigarettes among Chinese and used the information to establish a premium image for their brands, Alexandria Chu and colleagues at the University of California, San Francisco, wrote in the study.

‘Social Currency’

“What is unique to China, however, is the existence of certain domestic, luxury-branded cigarettes, which may cost more than a month’s salary,” said Yvette Chang, associate director at the World Lung Foundation in New York. “It is this perception of high value, and the aspiration to that value, that makes cigarettes such a pervasive social currency.”

The World Lung Foundation, the World Health Organization and Chinese health authorities implemented mass media campaigns in 2009 and 2010 portraying cigarette gifts as offensive and ominous of illness and death rather than being respectful gestures. The foundation is a beneficiary of Bloomberg Philanthropies, set up by New York Mayor Michael Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP.

Premium cigarettes, which are typically bought as gifts costing more than 15 yuan ($2.40) a pack, contribute 60 percent of the profit at China National Tobacco, said Cui Xiaobo, a health researcher at the Capital Medical University in Beijing. One in six people in Beijing have received cigarettes as a gift, according to a 2011 survey Cui conducted of 1,343 smokers in Beijing.

China National Tobacco has a 40.6 percent hold on global cigarette sales, ahead of Philip Morris International with 14.9 percent, British American Tobacco with 12.2 percent, and Japan Tobacco Inc. with 8.3 percent, according to Euromonitor International.

$19 Billion Profit

China’s cigarette monopoly had net income of 117.7 billion yuan ($19 billion) in 2010 on sales of 770.4 billion yuan, according to a rare release of the company’s financial data last year. The company “will never allow” policies designed to reduce their attraction, Cui said in an interview.

“It’s impossible for people in China to send gifts printed with pictures of rotting teeth and cancerous lungs -- that would be too disgusting,” he said.

Graphic Opposition

Cigarette companies are especially incensed about graphic warnings because they hurt consumption, said Judith Mackay, a Hong Kong-based doctor who advises groups such as the World Lung Foundation on tobacco control.

“They scream if they think anything is effective,” said Mackay, who was named one of the most influential people in the world by Time magazine in 2007 in recognition of her work campaigning for stricter tobacco controls.

Cigarette sales in China will expand an average of 13.5 percent a year to reach 2 trillion yuan ($321 billion) by 2016, according to London-based Euromonitor. Rules banning smoking in public places from May 2011 have been criticized for being ineffective because of poor enforcement and smoking cessation aids, such as Johnson & Johnson’s Nicorette gum, have struggled to attract customers.

The measures the government has taken “are not forecast to have much impact on the volume consumption of tobacco,” Euromonitor said in a November report, adding that the market for smoking cessation aids remains “negligible.”

320 Million Smokers

The country has about 320 million smokers. The government pledged in December to try to reduce smoking prevalence to a quarter of the adult population by 2015 from 28 percent in 2010. Still, it avoided adopting a WHO recommendation that packs carry graphic deterrents.

In the U.S., 19 percent of adults smoke cigarettes, the Atlanta-based Centers for Disease Control and Prevention estimates.

Over the next two years, the WHO will work with China’s Ministry of Health to introduce a national smoke-free law.

“This needs to be an important health and economic development priority for China, and having a national law with teeth and with an enforcement mechanism is really badly needed,” said Douglas Bettcher, Geneva-based director of the organization’s Tobacco Free Initiative, in a telephone interview.

Reducing deaths in China from heart disease and stroke, for which smoking is a main contributor, by 1 percent a year through 2040 could generate economic value equal to 68 percent of China’s 2010 real gross domestic product, or $10.7 trillion, the World Bank said in a report published in 2011.

Even still, the consequences of smoking aren’t enough to dissuade Gao, the Beijing office worker, from buying cigarettes for relatives and bosses.

“I know it’s unhealthy, but they will still smoke even if I don’t buy,” she said.

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at dloo7@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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A woman walks past a cigarette store in Beijing. The country has about 320 million smokers.

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A woman walks past a cigarette store in Beijing. The country has about 320 million smokers.

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People smoke outside the Great Hall of the People prior to the opening of China's National People's Congress in Beijing on March 5, 2012. Close

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A shopkeeper smokes a cigarette in Miyun County, Beijing. Over the next two years, the United Nations health agency will work with China’s Ministry of Health to introduce a national smoke-free law. Close

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Workers smoke as they walk through the Tsinghua University Science Park in the Shangdi area of Beijing. Cigarette sales in China will expand an average of 13.5 percent a year to reach 2 trillion yuan ($321 billion) by 2016. Close

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