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SCMP Reporter

FACED with increasing restrictions and undeniable medical evidence, tobacco companies are turning away from traditional Western markets to less regulated developing economies.

  And the number one target for expansion is China - home to an estimated 300 million smokers, one-third of the global market, which has in the past been supplied by the world's largest single government tobacco monopoly.

  The rewards in China are huge, although the tobacco companies say they have not attempted to calculate the potential revenues.

  But they could be looking at sales of 1,204 billion cigarettes a year. Not surprisingly, the biggest tobacco company in the world, Philip Morris, is desperate for a foothold in the Chinese market.

  Last year the company moved a step closer with the signing of a joint venture with the China National Tobacco Corporation to manufacture Marlboro cigarettes in China. It is the first such deal struck with an international tobacco company.

    The Asian manufacturing base of Philip Morris is growing - last year they began building a leaf processing plant in Malaysia, produced Marlboro cigarettes for the first time in Vietnam and unveiled plans to build a cigarette factory in Kazakhstan.

  The agreement is multi-faceted with room for further concessions and will use China's home-grown tobacco.

  With a newly emerging economy, and a society in China trying to emulate aspects of the West, the stage is set for a massive boost in Philip Morris' tobacco revenues, which last year totalled about US$28.6 billion (HK$223 billion).

  But in the way of their expansion stand a small number of individuals and lobby groups, comprised largely of doctors, who are actively pushing for increased bans on smoking.

  Their reasons are simple - smoking kills, pollutes the air and imposes discomfort on others, placing an impossible burden on health care budgets which are left to fund treatment for the long-term effects.

  Hong Kong expert Dr Judith Mackay, who is advising the Chinese Government on anti-smoking legislation, said the battle over smoking in China will be one of the most significant that the anti-smoking lobby faces.

  So far Beijing has introduced regulations covering compulsory health warnings on cigarette packets, smoke-free areas in public places and offices and a ban on advertising, including electronic and print media and sports stadiums.

  In this respect their laws go further than those of Hong Kong. While Hong Kong has bans on advertising for electronic media, it has not been extended to print.

  Since the late 1980s, Beijing has instituted health education programmes, targeting rural farmers and schools.

  They have set up the Chinese Association on Smoking and Health (CASH) which has offices in over half the provinces   With so much effort going into anti-smoking and health efforts, the joint venture with Philip Morris seems odd.

  'It's puzzling to me why they did it,' said Dr Mackay.

  Despite a growing world awareness of the detrimental effects of smoking on the health of both smokers and non-smokers, and the environment, Philip Morris say they can't understand the fierce opposition to their expansion.

   Claiming that everyone in the world now knows the risks of smoking, (although this may be questionable in parts of China where literacy and education are not at Western levels) they say a minority of power-hungry consumer advocates are attempting to limit individual freedoms.

  The Asian expansion strategy is prompted in part by the increasing restrictions on smoking and its advertising now being introduced in the Western world. The tobacco companies are alarmed at the number of restrictions mushrooming in that bastion of consumer freedom, the United States.

  The issue is becoming one of the most contentious areas for regulation in the US. At the federal level bans on smoking are in all federal offices and defence establishments, and blanket bans on smoking in the workplace are under consideration by the Occupational Health and Safety Administration.

  State laws vary, with California leading the way with total bans in public places imposed in some areas. And local governments, keen to make their mark, impose their own restrictions. New York City's new restrictions on smoking in restaurants which seat more than 35 people require smoking rooms to be entirely closed off and separately ventilated.

  The solution for the US, according to the tobacco companies, is 'accommodation': providing smoking and non-smoking facilities, with smokers being polite and considerate of non-smokers, and vice versa.

  They support a campaign of putting signs up at restaurants to show whether smoking and non-smoking areas are provided.

  Ironically, while they are calling for this in the US, it is too restrictive for their liking for Hong Kong.

  'This is just the beginning. We are going to see a lot more legislation and restrictions in Hong Kong,' said Colin Goddard, head of Corporate Affairs for Philip Morris Asia.

  Legislative Councillor Dr Leong Che-hung would like to see a total ban on smoking in public places.

  'We have to fully accept the fact that smoking is hazardous to health and I really feel there has to be proper regulation of smoking,' he said.

  'The tobacco companies say if people want to smoke why stop it - that is one thing, but allowing them to advertise and influence young people is not a good thing.'   The tobacco companies claim cigarettes are an 'adult product' and are marketed towards adults only. They say they support programmes designed to stop children smoking, such as advice for shopkeepers on recognising fake identification.

  But when asked what makes adults take up smoking, they say peer pressure. Asked what makes children take up smoking, they give the same answer.

  Asked to clarify the difference, they hedge, mumble and talk about 'a very low incidence' of children smoking. But the figures show it is a major problem among children.

  A recent survey carried out by Hong Kong's Council on Smoking and Health, (COSH) showed that 29 per cent of secondary school students aged between 12 and 15 years old, had tried smoking.

  More alarmingly, about 35 per cent of students surveyed believed that at least one cigarette brand looked attractive in an advertisement.

  And, according to the Executive Director of the Hong Kong Council on Smoking and Health, Dr Angeline Oyang, it is the youngsters who are far more vulnerable to advertising than the older age groups.

  The other major argument trotted out by the tobacco companies is culture. It is the Chinese culture to smoke, they claim, as it is with many Asian countries. What gives governments the right to impose regulations on people's cultural behaviour?   More than 61 per cent of the male population of China smokes, as opposed to only seven per cent of the female population. But selling tobacco as a cultural tradition is nonsense, Dr Oyang said.

  'Spitting was regarded as part of Chinese culture 10 years ago but you no longer see spittoons in restaurants,' she said.

  'It took us 10 years to teach Hong Kong people not to throw litter in the street but we did it.

  'Not everything that people claim as culture is socially acceptable and culture can be changed,' she said.

  And as Dr Mackay points out, the fact that Philip Morris directs specific marketing of certain brands, such as Virginia Slims, towards women would undermine the alleged 'Chinese culture' anyway.

  'Their advertisements are especially targeted at emerging nations, they are selling the image of the sophisticated smoking woman as the standard of the West which these countries are now trying to emulate,' she said. 'Women traditionally don't smoke in China - but they will take it up in increasing numbers if this message is allowed to get through.'    The fight over smoking began when the first health effects became public in the early 1950s. The fact that Philip Morris had to do a massive recall of their US cigarettes because of dangerously faulty filters last weekend is a sign of changing times.

  While they said it shows their concern for people's health, it has more to do with the high level of scrutiny they now find themselves under.

  The anti-smoking lobby is one of the most powerful in the world, and the tough new anti-smoking laws introduced in the US, Europe, Australia and Asia are evidence of their increasing success.

  But the tobacco companies say they are fighting for the right to sell a legal product.

  And if governments of the world decide to ban smoking everywhere?   'No, that will never happen. If anyone tries to do that, we will sue and tie it up in the courts forever,' said one Philip Morris US executive.

    Karin Bishop has recently returned from a Philip Morris sponsored-trip to the United States 



The tip of a burning issue