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Smoking cessation: state owned tobacco companies in China and Japan are at odds with their countries’ commitments

BMJ 2019; 365 doi: https://doi.org/10.1136/bmj.l2328 (Published 19 June 2019) Cite this as: BMJ 2019;365:l2328

Linked editorial

State versus private ownership of tobacco companies

  1. Flynn Murphy, reporter and editor,
  2. Gabriel Crossley, reporter
  1. Beijing, People’s Republic of China
  1. Correspondence to: flynnpmurphy{at}gmail.com

The governments of China and Japan own giant tobacco companies. They’re also in charge of tobacco control. Flynn Murphy and Gabriel Crossley look at how that’s working

Tobacco companies worldwide have gone to great lengths to keep selling products that they now admit kill people.1 In China and Japan those efforts typically take the form of shadowy dialogues between government officials. That’s because both of these governments—despite being signatories to the Framework Convention for Tobacco Control, sponsored by the World Health Organization—own or control large tobacco companies.

The framework calls for signatories to protect tobacco control policy from vested interests,23 but both governments are themselves heavily invested in the strength of their tobacco industries for the jobs and revenue they provide. The factories fuel vast ecosystems of stakeholders, including growers, advertisers, retailers, and officials. It was once common for countries to own all or part of a tobacco company; by 2015 that number was down to 16.4 The size of such companies in China and Japan, however, makes them exceptional. China has by far the biggest tobacco company in the world by market share (China National Tobacco Corp; CNTC), and Japan’s ranks fourth (Japan Tobacco; JT).5

In Japan, the Finance Ministry by law retains a minimum one third stake in JT, the successor company to the nation’s former tobacco monopoly, which was ostensibly privatised in 1985. JT contributed over 864 billion yen (£6.2bn; €7.1bn; $7.8bn) in tobacco taxes in the fiscal year ending May 2018.6The BMJ calculates that the Japanese government’s stake will have yielded about 100 billion yen in additional dividend payments in 2018.

China’s state owned tobacco company is a near monopoly that produces a third of the world’s cigarettes.7 Data are closely held, and CNTC did not respond to The BMJ’s questions. It shares staff and offices with its regulator, the State Tobacco Monopoly Administration. Both sit under the muscular Ministry for Industry and Information Technology. CNTC reports that the domestic tobacco industry poured 1 trillion yuan (£1.3bn; €1.4bn; $1.6bn) in tax and profits into government coffers in 2018 and employed 550 000 people. Meanwhile, the most recent available tobacco control expenditure figures available from WHO are from 2008 and amount to 20 million yuan8: that’s less than one US cent per smoker. In 2016 Japan had just two full time equivalent positions for tobacco control.9

Public health advocates fight back . . . quietly

Despite the immense wealth and clout of these industries the tobacco control advocates are slowly being heard: in Japan, mostly outside the government; in China, after long term inertia, within the vast bureaucracy. Their successes have largely depended on the political winds of the day.

In China, where one in three of the world’s cigarettes is smoked and tobacco related disease kills 1.1 million people a year, a landmark 2013 report on tobacco control from the powerful Communist Party School, seen by The BMJ, is said by tobacco control advocates to have quietly lit a fire under government efforts to curb smoking. Symbolic responses followed: rules to discourage officials from smoking in public, laws banning tobacco advertising and increasing cigarette taxes, health warnings on packs, a ban on vending machine sales, and various city-wide bans on smoking in public spaces. These policies were implemented with mixed success.

But in 2016, when tobacco sales dropped for the first time in 15 years, the industry mobilised: CNTC’s sales actually rose in 2017, as well as in the first quarter of 2018.10 Industry lobbying is almost all behind closed doors, says Judith Mackay, a Hong Kong based senior adviser at a US non-profit public health advocacy group, Vital Strategies, who has advised top Chinese officials on tobacco control.

“Probably 99% of that lobbying we will never know about,” she says, “because it’s somebody from the tobacco industry, or somebody from the MIIT [Ministry for Industry and Information Technology], just talking to the finance minister.”

Only last year did health bureaucrats wrestle jurisdiction over tobacco control policy away from the MIIT. Until then it was “like putting the fox in charge of the hen house,” says Mackay, because the department that oversaw the tobacco industry was also responsible for warnings, advising on tax rates, and even implementing the Framework Convention for Tobacco Control—one reason, she says, that China still lacks picture warnings on packs.

An even harder fight in Japan

Across the East China Sea in Japan, four decades of grassroots movements and work by non-governmental organisations have seen smoking rates decline despite government actions rather than because of them. Observers say that the Finance Ministry’s controlling stake in JT, alongside its control of government purse strings, have hobbled health officials. A landmark national indoor smoking ban, passed last year ahead of the 2020 Summer Olympics in Tokyo, was watered down to exclude over half of Japan’s restaurants after lawmakers bowed to pressure.11

Mark Levin, a law professor who focuses on tobacco regulation in Japan, says, “Even on a formal basis the government’s conflict [of interest] is profound, but on an informal basis, when someone owns a third of a business, they’re true insiders.”

JT’s controlling shareholder also regulates tobacco marketing and sets prices. Then there are tobacco leaf growers, convenience store associations that represent cigarette sellers, and the marketing complex the industry supports. Levin says that these relations are responsible for a decades long “hands off” approach by health officials concerned that their funding might be cut in other areas, letting Japan’s tobacco control efforts “fall behind.”

A spokesperson for JT told The BMJ that it was the Japanese government’s responsibility to implement the Framework Convention for Tobacco Control and that JT supports the framework’s call to protect policy from commercial and other vested interests. The spokesperson said that regulating tobacco products was “both necessary and right” and that JT’s “expertise, knowledge, and experience are invaluable to the policy making process related to our industry.”

The company said in a statement to The BMJ, “We regularly express our views and positions in Japan and in other countries, and we abide by laws and regulations while maintaining our right to question, and if necessary challenge, policies that we believe are flawed, unreasonable, disproportionate, or not based on evidence.”

Questionable claims

One thing JT continues to challenge is passive smoking’s link to lung cancer,12 heart disease, emphysema, and chronic bronchitis, almost 40 years after a major study in Japan found that the wives of heavy smokers had as much as twice the risk of developing lung cancer as women married to non-smokers13—and in the face of other, overwhelming evidence.14

CNTC has made its own questionable health claims. Front and centre is its “premiumisation strategy,” which began in 2009 and successfully convinced many smokers to trade up to more expensive brands on the false grounds that they were less harmful.15 Aggressive marketing techniques linked such “premium brands” with power and business acumen, capitalising on the central role of cigarette giving, mostly among men.16 Such social practices have been found to drive cigarette consumption, increase initiation, and frustrate attempts to quit.17

But Mackay says that the industry has generally not needed to attack the science on smoking, because in China the economics are so clear. She recounts that, before the then Communist Party general secretary Jiang Zemin opened the World Conference on Tobacco or Health in Beijing in 1997, he received a letter from China’s tobacco industry.

Mackay remembers: “They said, ‘Yes, China should look after the health of its people but, economically, remember how many people are employed by it, how many people are dependent on tobacco farming and tobacco manufacturing; think of the amount of tax.’” This emphasis on economic arguments has changed little since.

On the cultural front

Then there are cultural factors to contend with. Frances Stillman, currently at the Johns Hopkins Bloomberg School of Public Health in Baltimore, USA, has worked on capacity building projects for tobacco control in China and Japan since 2002. In the early years her team focused on what might have seemed like an easy target—smoking in Chinese hospitals. They were starting at the bottom: in the late 1990s the key person in charge of China’s tobacco control efforts nationwide had a budget of just $50 000 (£39 250; €44 125), says Stillman.

“It was really hard and really slow. Very, very slow,” she told The BMJ, as people simply disobeyed hospital-wide smoking policies, although some interventions brought improvements. Part of the issue was cultural, she says, citing the widespread practice of giving out cigarettes at weddings or as a respectful greeting.

Political and economic realities

“Tobacco growers and retail unions are always pushing the government not to develop tobacco control laws,” says Kyoichi Miyazaki, secretary general of the Japan Society for Tobacco Control. With the state unwilling to act, people such as Miyazaki—alongside taxi drivers, teachers, and doctors—have stepped up to the plate. Since the 1970s, when three quarters of men in Japan smoked, grassroots movements have carved out nooks of resistance, organising smoking moratoriums in restaurants, taxis, and railway stations.

Mackay has compiled some figures over the years: in 1985, 65% of men and 14% of women smoked in Japan; by 2016 these figures had fallen to 27.9% and 9.7%. But there’s much more to be done, says Miyazaki, who’s been pushing for tobacco regulation to be stripped from the Finance Ministry and given to the Ministry of Health, Welfare and Labour. His ultimate goal is for Japan’s tobacco industry to be closed down.

That looks unlikely to Levin, who says that, in a perfect world, government control of the industry might be an asset to tobacco control. “You could then say, ‘Hey, let’s figure out how to land this monstrosity,’” he says, comparing it to a giant airborne passenger jet. “It’s got hundreds of thousands of people and enormous financial investment travelling. And, if you just crash it, that isn’t necessarily going to work well. But if you wanted to wind it down, ownership wouldn’t be a bad thing.”

The problem with that metaphor is that the narrative is a fantasy, he says, adding, “Japan Tobacco is Japan’s tobacco.”

In China, where officials are assessed for promotion largely on the basis of their region’s gross domestic product growth, Stillman remembers fellow Chinese tobacco control advocates being concerned about destabilising development in Yunnan, a mountainous province in China’s south west where tobacco farming has become a key driver of the regional economy.

The Framework Convention for Tobacco Control acknowledged this economic reality 16 years ago when it noted the need to provide “support for economically viable alternative” work for people engaged in the industry. Despite no serious prospect that the Chinese government will divest from tobacco in the near future, says Mackay, some work along these lines has been promising.

Pilot schemes

One example is crop substitution. A pilot programme in 2012 in the town of Yuxi, Yunnan—home of Hongta Tobacco Group, owned by CNTC—encouraged farmers to learn new skills and substitute their tobacco crops for food crops.18 Noting that the state monopoly keeps tobacco prices artificially low, the researchers reported that farmers’ yearly incomes increased by 21-110% per acre as a result.

Virginia C Li, of UCLA Fielding School of Public Health in California, led the project. She told The BMJ that locals outside the pilot scheme had also been quick to see its advantages. “Neighbouring farmers simply took it upon themselves in turning their cooperatives into business enterprises because they can earn a better income than tobacco,” she said. But the pilot is now over and the lessons learnt, says Li: “It is up to the government and related organisations to chart its course.”

Mackay says that, for public health professionals to advance the cause of tobacco control in places such as China and Japan, making the health case isn’t enough. She highlights “political and economic realities that we all have to master.”

As tobacco use slows at home, JT now focuses on international business, which it describes as its “growth engine.”19 Foreign tobacco sales contributed 59.2% of the company’s revenue last year, compared with 28% from local sales. JT has factories in every continent except Australia and Antarctica.

And China’s tobacco monolith, CNTC, has been ramping up efforts to go global as part of the nation’s international development strategy, the Belt and Road Initiative.7 Last year China exported $722m worth of cigarettes, nearly a threefold increase from a decade earlier.20

Footnotes

  • doi: 10.1136/bmj.l4056
  • A version of this article is being published on the web by Caixin, an independent news outlet headquartered in China.

  • Competing interests: We have read and understood BMJ policy on declaration of interests and declare that we have no competing interests. FM and GC work for Caixin Global, the English language arm of Caixin Media, which is an independent business news organisation based in Beijing.

  • Provenance and peer review: Commissioned; not externally peer reviewed.

References

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