China has intensified enforcement against the smuggling of North Korean cigarettes, handing prison sentences and fines to traffickers and expanding investigations to target the entire illicit supply chain, but demand for the products among Chinese consumers remains strong, according to sources cited by Daily NK. Recent cases in Dandong saw smugglers sentenced to two years in prison and fined 200,000 yuan ($41,000), as authorities increased pressure on storage and retail networks, discouraging merchants from handling North Korean tobacco even when legally imported. Despite the crackdown, North Korean cigarette manufacturers are expanding product ranges—introducing slim formats, varied tar levels, and competitively priced offerings—to sustain demand in China, with observers suggesting that continued consumer appetite is likely to keep illicit distribution active despite tighter controls.
Tag: North Korea
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China’s North Korean Smuggling Problem Not Gone Yet
While a report from Daily NK last week said China’s crackdown on smuggled cigarettes from North Korea ground the illegal activities to a halt, a story yesterday (August 26) from Radio Free Asia (RFA) suggests otherwise. Smugglers and traders told the news outlet that the combination of surging demand and lenient penalties (compared to other contraband) makes the trade highly profitable.
Residents in North Korea’s Yanggang province told RFA that the cross-border trade, which began about two years ago, has expanded sharply in recent months. Smugglers move 20–50 boxes per trip, each containing 500 packs, earning around 50 yuan ($8) profit per box.
While legally imported North Korean brands such as Chosun are sold mainly as pricey tourist souvenirs, smuggled cigarettes are mostly in unmarked packaging and then rebranded by Chinese manufacturers in Jilin province and sold as domestic products. North Korean cigarettes cost as little as 2,500–3,500 won ($0.36–0.50) per pack, far cheaper than Chinese brands. According to RFA, factories such as Korea Sonbong General Corporation and Paeksan Cigarette Company supply the bulk of production near the border.
China, home to more than 300 million smokers, consumes about one-third of the world’s cigarettes, making the black market highly lucrative. Sources say the smuggling trade is expected to keep growing due to the low cost of North Korean tobacco and the relatively light punishments for offenders.
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China’s Crackdown Chokes Off N. Korean Cigarette Smuggling
North Korea’s once-lucrative cigarette smuggling operations into China have ground to a halt after Beijing launched a sweeping crackdown on illicit tobacco distribution, officials said. Daily NK sources said Chinese police and the State Tobacco Monopoly Administration arrested traders, confiscated contraband, and tracked deliveries via firms like SF Express and ZTO Express since August 3. The clampdown left major North Korean firms, including Korea Sinhung Trading Corp. and Amrokgang Tobacco Co., scrambling for new foreign currency sources.
Chinese partners have suspended dealings, fearing heavy fines and confiscations. “Activities to earn foreign currency through cigarette smuggling run into trouble as Chinese traders quit the business all at once,” one North Korean source said.
With distribution channels collapsing, Pyongyang’s trading companies are now under pressure to find alternative exports. Traders in China say the current campaign is harsher and longer-lasting than past crackdowns, raising doubts about the future of North Korea’s tobacco trade.
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North Korea Cracking Down on Youth, Public Smoking
North Korea has launched a strict anti-smoking campaign in Pyongyang, targeting public smoking, especially in busy districts like Jung, Hwasong, Potonggang, and Pyongchon. The campaign, in effect through mid-July, involves patrols by various state organizations and school staff, with a focus on youth and public areas such as parks and bus stops.
Teen smoking is a key concern, with students being searched and their information reported to schools and political groups if caught. Critics say the campaign is hypocritical, given that Korean President Kim Jong Un is frequently seen smoking publicly. Despite anti-smoking laws passed in 2020, the leader’s own habits are seen as undermining the message.
“There was a crackdown last year too, but this year’s is much tougher. What’s different is that middle school boys are under constant surveillance and their pockets are being searched more frequently,” a source said. “These measures go beyond just restricting behavior. These orders are clearly meant to teach a harsh lesson.”
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Arrest in North Korea Smuggling Case
Photo: Taco Tuinstra A Chinese man who was arrested in Australia is awaiting extradition to the United States for allegedly selling counterfeit cigarettes in a North Korean scheme to generate revenue, according to Reuters.
“The individual is wanted to face prosecution in the United States for a number of sanctions, band fraud, money laundering and conspiracy offenses,” said a spokesperson for Australia’s Attorney-General’s Department. Jin Guanghua was arrested in Victoria and remains in custody.
According to an unsealed U.S. indictment, Jin, who is a Chinese citizen, allegedly committed bank fraud in an illegal scheme by North Korea to generate revenue through the purchase and sale of tobacco. The indictment stated that the North Korean banks used front companies to avoid U.N. sanctions.
According to the U.S. Federal Bureau of Investigation, Jin was one of three Chinese nationals acting as middlemen to purchase tobacco for companies owned by the North Korean government and military. The tobacco, which was purchased from international suppliers and shipped to Dalian, China, before being smuggled to North Korea, was used to manufacture counterfeit cigarettes to generate hard currency.
Jin was involved between 2009 and 2019, according to the indictment, and remains in custody “pursuant to the United States of America’s request for his extradition to face criminal charges in the United States.” A warrant for his arrest was executed in August, according to a spokesperson from a Victorian magistrates court.
Globally, North Korea is one of the largest producers of contraband cigarettes.
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‘BAT North Korea Trade Was Legal in Singapore’
Image: Andy British American Tobacco’s Singaporean affiliate did not break local laws when it sold cigarette components to North Korea, despite receiving a multi-million dollar fine in the U.S. for flouting North Korean sanctions, reports The Straits Times.
In April, BAT and its indirect subsidiary in Singapore agreed to pay U.S. authorities $635.24 million plus interest to resolve investigations into suspicions of sanctions breaches concerning business activities relating to the Democratic People’s Republic of Korea between 2007 and 2017.
North Korea is subject to sanctions by the United Nations and individual countries for developing nuclear weapons, money laundering and human rights violations, among other activities.
According to the Straits Times, Singapore authorities became aware in 2018 that BAT Marketing Singapore was involved in selling cigarette components to the Democratic People’s Republic of Korea (DPRK), but stopped sales since June 2017—five months before Singapore implemented the UN sanctions.
The authorities concluded that the company did not breach Singapore’s UN regulations. “The trade of cigarette components with the DPRK was not prohibited under our laws at that time,” the city’s police were quoted as saying by the Straits Times.
Today, trade sanctions against North Korea make it a crime for anyone in Singapore, as well as Singapore citizens based overseas, to supply, sell or transfer designated export items to anyone in North Korea, whether directly or indirectly.
Those found guilty of doing so can be fined up to SGD100,000 ($75,473) or three times the value of the goods that were dealt with, whichever is greater. They can also be jailed for up to two years or both.
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BAT Settles Investigation
Image: alexlmx BAT has reached an agreement with the U.S. Department of Justice (DOJ) and the Office of Foreign Assets Control (OFAC) to resolve investigations into suspicions of sanctions breaches concerning business activities relating to the Democratic People’s Republic of Korea between 2007 and 2017.
BAT has entered into a deferred prosecution agreement with the DOJ and a civil settlement agreement with the OFAC, and an indirect BAT subsidiary in Singapore has entered into a plea agreement with the DOJ. The total amount payable to the U.S. authorities is $635.24 million plus interest.
Under the agreement, BAT cannot comment on the documentation published by the investigating authorities or on related factual matters.
As announced in its half-year report of 27 July 2022, BAT recognized a provision of £450 million ($540 million) in line with the International Accounting Standards 37 requirements. its full year 2023 group guidance is unaffected by this announcement.
“On behalf of BAT, we deeply regret the misconduct arising from historical business activities that led to these settlements and acknowledge that we fell short of the highest standards rightly expected of us,” said BAT CEO Jack Bowles in a statement.”
“Adhering to rigorous compliance and ethics standards has been, and remains, a top priority for BAT. In recent years, we have transformed our compliance and ethics program, which encompasses sanctions, anti-bribery, anti-corruption and anti-money laundering. The significant steps already taken, as well as the continued refinements to the program that will be made as part of these settlements, will leave us even better equipped to lead a responsible and sustainable business.”