Criminal syndicates are reaping huge profits by smuggling mainland tobacco through Hong Kong into Britain, where it is sold at a 5,000 per cent mark-up, a government source says.
With the lure of such profit margins, the racket is thriving despite stringent enforcement action over the past two years, prompting Hong Kong customs to join forces with British and mainland agencies in an effort to stop it.
"The low delivery cost in Hong Kong is one of the main reasons the illicit tobacco is smuggled from the mainland to Britain through Hong Kong," the source said.
Intelligence shows the tobacco, made on the mainland, costs as little as HK$50 per kg on the wholesale market but commands HK$2,600 a kg in Britain.
It is packaged as the British brand Golden Virginia, a rolling tobacco, and sells for about 30 to 40 per cent less than the genuine product.
In an attempt to evade Hong Kong surveillance, counterfeiters have now turned to logistics companies to smuggle the parcels. They are stamped on the mainland with an address in Britain, smuggled into Hong Kong, where they are sent straight to the offices of the logistics companies.
"The logistics companies are then ordered to mail the parcels out of Hong Kong within three hours to avoid being detected by local law enforcement," said Wan Hing-chuen, who heads customs' investigation division combating illicit tobacco.
Previously, counterfeiters had to find places in the city where they could store the tobacco and package it in bags bearing the Golden Virginia name before mailing it to Britain through the postal service.
Last month, customs officers confiscated scores of Britain-bound parcels containing 1.3 tonnes of the tobacco. The haul had an estimated street value of HK$5 million.
In the first two months of the year, about 200kg of the rolling tobacco was seized. Customs officers confiscated nearly 1.3 tonnes in the first three months of last year.
The parcels were declared as containing litter bins, clothes or household products.
Wan said that most of the cases recorded last month were detected after receiving information from logistics companies.
Customs officers at the airport's airmail centre seized more than 10 tonnes between December 2011 and January last year and smashed a major syndicate.
Wan said counterfeiters usually laid low after a seizure then came back with new tactics to evade detection. "It's just a game of cat and mouse," he said.