Date: Thu, 14 May 98 09:43:56 CDT
From: Jonathan Dushoff <>
Subject: Big Tobacco in Taiwan
Article: 34756
To: undisclosed-recipients:;
Message-ID: <>

Smoke Signals

By Phelim Kyne, The China News, 3 May 1998

The glory days of Taiwan's pub-hopping, cigarette-dispensing Marlboro Girls may be numbered. Politicians and anti-smoking organizations alike are challenging the legality of the promotional methods favored by international tobacco companies in Taiwan as well as pushing for a new cigarette tax to discourage teen smoking. In a story that combines the classic Taiwan elements of sex, money, marketing and the grail-like quest for WTO membership, Phelim Kyne looks at the island's penultimate showdown with Big Tobacco in...Smoke Signals.

The conference room at the John Tung Foundation's Taipei offices on Fushing S. Road is now referred to informally by staff there as the gift room. There piled high on the large central table normally host to strategy sessions of Taiwan's long-time anti-smoking lobby group sits a wide selection of the promotional gifts that frequently accompany foreign tobacco companies in Taiwan.

The haul includes such things as radios, watches, engraved metal letter openers, lighters and compact discs. They are all high quality, stylish and according to John Tung CEO Dr. Yeh Ching-chuan, patently illegal.

This is the kind of thing that students really like, Dr. Yeh Ching-chuan says ruefully, picking up a black pencil case from a table piled high with cigarette gift paraphernalia. This is packaged together with two packs of Mild Seven cigarettes, he adds, before asking rhetorically, How many adults are interested in buying a pencil case?

Last month Taiwan's anti-smoking lobby went on the offensive against what it insists are the depradations of an international tobacco industry determined to make up for losses in their traditional markets in Europe and North America by grooming a new generation of young Asian smokers. This is a kind of (reverse) discrimination, Yeh says. The tobacco companies are trying to do in Taiwan what they can no longer get away with in the West.

Such an allegation is backed up by statistics of the World Health Organization. According to WHO, American cigarette companies already sell 85% of their products overseas. By 2020, WHO predicts tobacco-related deaths worldwide to jump to 10 million per year, with 2/3 of the victims in third world countries in Asia and Africa.

The dispute over the behaviour of foreign tobacco companies in Taiwan is just the latest in a long string of controversies that have surrounded the industry since foreign cigarettes first went on sale legally on the island eleven years ago. While the concession by the ROC government in 1987 to end its longtime embargo on foreign tobacco products ended years of international criticism of Taiwan's closed markets, Taiwan's jousts with big tobacco had only just begun.

Between 1987 and 1992, ROC government attempts to limit both the amount of foreign tobacco products that proceeded to flood into Taiwan and the the extent that such products could be advertised fuelled successive threats of Special 301 trade sanctions and retaliation by the US government. 301 was used (against Taiwan) as a form of economic blackmail, comments New Party Taipei City Councillor Jeffery Y.K. Hsu, a local anti- tobacco advocate. 301 put a lot of pressure on the (ROC) government to be more open to tobacco products.

However, sustained lobbying by the John Tung Foundation, culminating in a three day full page ad campaign in America's leading newspapers in 1992 that pitched Taiwan's case directly to the American people, eventually brought relief. That year, the US government pledged that it would no longer use 301 to pressure Taiwan to allow advertisements and public promotions by foreign cigarette companies.

Unfortunately, the years of virtually unregulated foreign cigarette advertising and promotions in Taiwan since 1992 have taken their toll.

In the countries where US pressure opened foreign markets, once the markets were pried open and advertising of foreign cigarettes was allowed, there was a 10% increase in smoking over and above what would have been expected from other factors, noted Judith Mackay, Executive Director of the Asian Consultancy on Tobacco Control in the July/Aug 1997 issue of the Multinational Monitor. There was of course a marked shift toward the foreign cigarettes, she added.

A glance at government statistics suggest a more positive picture in Taiwan. The overall number of Taiwanese that smoke has actually gone down in the past ten years, notes Dr. Yeh, noting that government statistics show the percentage of the population that smokes has gone from 32% to 29% between 1988 and the present. Yeh cautions that such a reduction is still far too small.

More worrying for Yeh and his colleagues at John Tung is the increasing popularity of smoking amongst Taiwanese youth. Statistics show a whopping 33% increase in the number of teenage smokers since 1993 alone.

But with 65% of the 700 million packages of cigarettes sold in Taiwan each year consisting of domestic brands such as Long Life, why is it that foreign cigarette companies are getting the rap for the increasing numbers of teen smokers? Long Life smokers are mostly the lao yen chang (old smoke guns) type of smoker, explains Lin Ching-li, PR Director at John Tung. Young people are not being attracted to smoking by brands produced by the Taiwan Monopoly Bureau.

Lin's opinions are echoed by Taipei City Councillor Jeffery Y.K. Sheu. There is no advertisement or promotion for Taiwan Monopoly Bureau cigarettes at all, he explains. But foreign companies are very competitive and use extremely ‘tricky’ ways to attract new customers.

It was just such ‘tricky’ advertisement methods that Taiwan's new Tobacco Hazards Control Act was designed to short-circuit. Passed into law last September, Article 9 of the law prevents tobacco companies from virtually all advertising and promotional activities. However, according to Yeh, Lin and Hsu, the provisions of the law are being widely ignored by international tobacco companies, including Philip Morris, RJR Nabisco, Davidoff, and Japan International Tobacco.

All of this is illegal, Yeh says, motioning to the stacks of tobacco promotional gifts piled high on the table in front of him. The law forbids companies from putting the brand names of cigarettes on promotional products, and requires that such gifts be worth no more than 25% of the value of the cigarettes they are sold with.

For emphasis, Yeh takes out a Marlboro wristwatch, the Philip Morris product's name emblazoned on both the watch face and strap. The watch itself is a technological wonder to behold: a manly multifunctional model complete with miniature compass and lighted dial. This watch was sold with a carton of cigarettes that cost NT$400, Yeh says. That means this watch only cost (Philip Morris) NT$100. Does that seem possible to you?, he adds.

Another example of the creative accounting employed by Taiwan's foreign tobacco companies is an AM/FM transistor radio complete with twin speakers that was sold with two cartons of 555 cigarettes for NT$800. The radio is a great deal for NT$200, Lin Ching-li says caustically.

Such violations of regulations governing the conduct of international tobacco companies abroad are apparently not unique to Taiwan. Whenever they can get away with it, the tobacco transnationals show nothing but contempt for the law and regulations of any country, noted an editorial in the June 1997 edition of the Multinational Monitor.

Compounding the problem of the international tobacco companies flaunting of ROC laws has been a pronounced tendency by the the government to turn a blind eye to such excesses. Enforcing the law has not been a government priority, Yeh says measuredly. In the six months that the law has been in effect, not a single violation (of the law) has been pursued by the government.

While admitting the efficacy of the Tobacco Hazards Control Act has so far been spotty, John Tung representatives have high hopes in another proposed law that they feel will even more effectively curtail teenage smoking on the island. A proposal currently making its way through the Legislative Assembly calls for a tax increase of 10% on imported tobacco brands.

Citing American studies that have have shown that an increase of just 1% in the price of a package of cigarettes can reduce the number of smokers in the 12-17 age bracket by 1.2%, Yeh has high hopes for the potential positive effects of a tobacco tax increase.

A 10% increase will have a significant deterrent effect on young people who otherwise may be tempted (by low cigarette prices) to take up smoking, Yeh explains. Even if (the tax) doesn't reduce the number of present smokers, the (tobacco) tax proceeds will be devoted to health and non-smoking education that will prevent an increase in future smokers.

According to Yeh, a tobacco tax increase is long overdue when viewed in relation to the rates which cigarettes are taxed in most other countries. Taiwan has some of the lightest cigarette taxes in the developed world, Lin says pointing out that cigarettes taxes in such places as Norway, Denmark and Canada are 200%, 85% and 70% respectively, respectively, compared to a paltry 40% of the per pack price in Taiwan.

Taiwan's tobacco tax rates rank poorly even in the Asian region, with Japan and Hong Kong charging 60% and 40% respectively. The proposed 10% tax increase (on cigarettes) will bring the tobacco tax rate up to 50%, still far lower than most other (developed) countries, Dr. Lin notes.

Unfortunately, still-fresh memories of previous Taiwanese anti-smoking legislation rumbled by the the big stick of US 301 trade sanctions have until just this week made John Tung representatives wary of the success of the tax proposal. We have to convince AIT [American Institute in Taiwan, the unofficial embassy—JD] that this is a non-discriminatory tax increase that is aimed strictly at improving the health of the nation rather than infringing on the rights of foreign (tobacco) companies, Yeh explains.

Other more far-ranging concerns have plagued the tobacco tax increase proposal There is some fear on the part of the (ROC) government that the (tobacco) tax may hurt Taiwan's chances for entry into the WTO, Yeh says. Such an outlook is clearly a worry for Yeh. (The tobacco tax) is not and should not be a trade issue, he says. This is a matter of the health of our country.

Yeh's fears about AIT opposition to the proposed new tobacco tax were put to ease this past Thursday when representatives of the John Tung Foundation and six other groups that support the new tax met with AIT trade officials. AIT has told us that they are extremely supportive of the new tax, Lin Ching-li enthused during a phone interview with the China News on Friday. AIT also says that they can forsee no connection between the new tobacco tax and the question of Taiwan's entry into the WTO.

For Dr. Yeh at the John Tung Foundation, such a development is a hopeful sign of a future in which the effects of tobacco use play a far less serious role in Taiwanese society than it presently does. We're striving for an eventual recognition of the ability to breathe fresh air as a fundamental human right, Yeh says. Controlling and reducing the consumption of tobacco products is an important step toward that goal.

Meet Mr. Chen Geh-yuan, the not-so-public face of the international tobacco industry's ROC lobby organization, the Taiwan Tobacco Institute.

The Elusive Mr. Butts: On the Trail of International Tobacco in Taipei.

The so-called Godfather of the Taiwan's tobacco industry, Mr. Chen's responsibility is an unenviable one: to act as a spokesperson for an industry reviled internationally for its direct connection to the deaths (based on WHO estimates) of three million people worldwide each year and notorious domestically for its repeated and ongoing violations of Taiwan's Tobacco Hazards Control Act.

Taiwan Tobacco Institute materials fancifully describe the Institute as an information exchange about all aspects of foreign tobacco company operations in Taiwan. Unfortunately, actually getting hold of the Institute, let alone any information it purportedly exists to exchange, is a daunting task.

For one thing, The Tobacco Institute isn't the kind of organization that will give its number out to just anyone. Look under tobacco and institute in either of Taiwan's major English language directories and you'll come up flat. Try under cigarette and you'll fare no better.

The frustration created by such a fruitless search is soon surpassed by surprise that all international tobacco companies in Taiwan are similiarly unlisted, a curious act of modesty for an industry that sells approximately 245 million packages of cigarettes on Taiwan each year.

Once acquired, however, the number of the Taiwan Tobacco Institute soon puts me through to a Ms. Cheng. Polite, helpful and sympathetic, Ms. Cheng's phone demeanor, the antithesis of that of the average Taiwanese receptionist, immediately set off alarm bells off in my mind. In soothing yet resolutely professional tones, Ms. Cheng assured this reporter that an interview request with Mr. Chen would be forwarded to him posthaste and that the spokesperson himself would quickly be in contact with me.

Over the next eight days, I renewed my phone liason with Ms. Cheng on a frequently twice- daily basis. The spokesperson, alas, was unfailingly either in a meeting, out of the office, taking the day off or otherwise inexplicably available.

On the eighth day, Ms. Cheng's patience had worn as thin as my own. On the occassion of my second call of the day, after exchanging ritual phone obsequesies and dutifully taking my usual message (by that time she knew it by heart, pro that she is) Ms. Cheng added, He's not willing to see you, she confided, adding, he told me this last week.

I shouldn't have been surprised. I had, after all, been warned. Mr. Chen's contact with the media are all very one-way, John Tung Foundation PR Directon Lin Ching-li warned. He avoids interview situations in which he has to answer questions.

Chen Geh-yuan's Taiwan Tobacco Institute is the local subsidiary of The (US) Tobacco Institute, based in Washington DC. Since 1958, The Tobacco Institute, along with its sister organization, The Council for Tobacco Research, have been entrusted by their sponsors, the American cigarette manufacturers, to present the case of American tobacco to the American public and their political representatives.

The success of both organizations have been, say their critics, a textbook study in media manipulation. Described by Business Week magazine of having run The longest running misinformation campaign in business history, The Tobacco Institute and The Council for Tobacco Research can congratulate themselves for having staved off regulation and outright prohibition of tobacco products in the US more than thirty-four years since the first US Surgeon General's report on the connection between cigarette smoking and lung cancer.

There has never been a health hazard so perfectly proven as smoking, Michael Pertschak, former head of the US Federal Trade Commission once commented with regard to the lobbying efforts of the US tobacco industry, and it's a measure of the Council (for Tobacco Research's) success that it is able to create the illusion of controversy in what is so elegantly a closed scientific case.

The prospect of a meeting with Chen Geh-yuan, head spin doctor for the Taiwan Tobacco Institute, filled me with an almost euphoric sense of anticipation. I longed to hear him explain away the pencil box giveaways with packs of smokes, the hip but illegal Marlboro wristwatch, the interview process for those siren-like cigarette girls and the catalogue of other sections of the ROC's Tobacco Hazards Control Act the industry he represents had been accused of violating.

I decided to take the international tack. Sensing that that Chen's masters in the US would be less than pleased by his refusal to meet with local media to exchange information on foreign tobacco companies activities in Taiwan, I faxed The Tobacco Institute in Washington asking them to intercede on my behalf.

While awaiting their response, I read one of the only articles written in the local Chinese- language media about Chen Geh-yuan and the Taiwan Tobacco Institute. It painted a picture of a successful businessman (27 years of experience working with British tobacco companies in Taiwan) with a certain individualistic flair.

Forsaking suits and ties for the mandarin collar Tang-style of dress, Chen personally disdains cigarettes (Not strong enough, is the manful quote), preferring to manage the PR affairs of international tobacco in Taiwan inhaling and emittting the more distinctive fragrances of imported Cuban cigars.

Apparently, Chen completely agrees with the goals of the John Tung Foundation, and perceives the essence of his position as ensuring that the foreign tobacco companies he represents obey the laws of Taiwan.

(Chen) contacted us a couple of years ago offering to hold a joint non-smoking activity, Dr. Yeh Ching-chuan, CEO of the John Tung Foundation recalls, shaking his head. He basically said I'll put up the money, you run the activity. The galling irony of such an offer, which was refused, was not lost on anyone at John Tung. We all got a good laugh out of that one, Yeh adds.

Days later, a fax from The Tobacco Institute arrived, apologizing that The (US) Tobacco Institute could only involve itself with tobacco-related issues within the United States. Instead, the fax suggested that the head offices of the US cigarette companies themselves be contacted. Helpfully, a list of the addresses and phone numbers of the top American cigarette companies were included.

Unfortunately, there were no fax numbers included, and since China News management looks askance at cavalier long-distance phone bills, I refaxed The Tobaccco Institute asking for the fax number of the biggest company, Philip Morris.

After a week I received a terse message from The Tobacco Institute in Washington that their policy forbade the communication of fax numbers of the cigarette companies. At the bottom of the sheet was a spooky warning that transmission of the contents of the fax was a violation of some arcane US law. The message was clear: you're not going to get another peep from us.

Resigned to the prospect of never getting the Taiwan Tobacco Institute's side of the story, I decided to settle for a picture of the TBI sign outside its swank, Taipei business district office.However, unlike every other office on that floor, and in the rest of the building for that matter, The Tobacco Institute posts no sign next to its door.

I peered nervously through the glass door, hoping for a surreptitious farewell glimpse of Ms. Cheng before heading to the elevator, trying to ignore the cloying smell of cigar smoke and the low rumble of mocking laughter that seemed to emanate from the office walls behind me.

Taipei New Party City Councillor Jeffery Y.K. Sheu is well-acquainted with the crowds of attractive young women who, wearing custom-made uniforms that advertise the cigarette company that they represent, make the rounds of Taipei's bars giving away sample cigarettes to all who want them.

What (the cigarette girls) do is illegal, Sheu declares, pointing out the section of Article 9 of the Tobacco Hazards Control Act that details using cigarettes as gifts as a contravention of the law.

The use of cigarette girls is by no means limited to Taiwan. According to the US anti- smoking NGO Infact, Taipei's cigarette girls share the same mission as Eastern Europe's Marlboro Girls, who cruise concerts and discos passing out free cigarettes to patrons. Those who accept a light for that cigarette are rewarded with a pair of Marlboro cigarettes. In Buenos Aires, young women in khaki safari gear and cruise from nightspot to nightspot in a jeep sporting a yellow Camel logo on a similar mission of free cigarette distribution.

However, the international aspect of Taipei's cigarette girls are cold comfort for Sheu. Instead, he's masterminding an effort to ensure that Taipei's cigarette girls are run out of town and eventually off of the island. It's a problem of enforcement, Sheu says with regards to the high density of cigarette girls in Taipei and the other numerous violations of the Tobacco Hazards Control Act.

According to Sheu, the Taipei City Governmnet has simply not been doing its job. The (Taipei City) Bureau of Health is responsible for seeing that the law is enforced, but they've not done anything, Sheu exclaims, noting that in the six months since the law came into effect there have been no legal action taken against the violators of the Act's provisions.

Those days, Sheu says confidently, are definitely over. I've met with the head of the Taipei City Bureau of Health and he's agreed that action must be taken against the illegal advertising and promotion methods that Sheu says can be found throughout the city.

Like a sherrif in a lawless prairie town somewhere in Marlboro Country, Sheu is determined to draw a line in the sand and force foreign tobacco companies to abide by ROC laws. We have to challenge the (foreign) tobacco companies, Sheu says. What they are practicing is a kind of ideological indoctrination that has to stop.

As an example of such indoctrination, Sheu points out a Davidoff advertisement off of Chienkuo N. Road. That Davidoff ad doesn't have a cigarette in the picture, but their purpose is easy to see - promoting a cigarette brand.

One of the more inventive and elaborate foreign cigarette company advertisements in Taipei is the Mild Seven Times cafe in the city's Ting Hao district. We're the first and only Mild Seven cafe in the world, the owner, Mr. Lee , explained proudly in a phone interview.

Such news is no surprise to John Tung Foundation CEO Dr. Yeh Ching-chuan. That kind of operation isn't allowed in most other countries, he says, adding it's illegal according to ROC law as well. The Mild Seven Times logo is, Yeh says, a prime example of brand stretching, in which cigarette names are applied to a variety of other consumer items.

Lee, who opened the cafe four years ago, claims to pay royalties to Japan International Tobacco (which produces Mild Seven cigarettes) for the privelege of using the Mild Seven trademark, and professes confusion at the suggestion that his operation may be illegal.

How can it be illegal? he asks. My cafe doesn't have anything to do with advertising cigarettes or encouraging people to smoke. However, Lee's response to a request from the China News that he supply his full name indicates that he might not be completely ignorrant of the legal ramifications of his cafe. It'd be better not to use any names, he said shortly before hanging up.

Back at Taipei City Government, Sheu is adamant that Lee's cafe has got to go. The name will have to be changed, Sheu says. If they refuse, we'll deny them a business license.

Suggestions that such overt action against the interests of international tobacco might attract the wrath of the well-funded Taiwan Tobacco Institute and its shadowy spokesperson Chen Geh-yuan has Sheu practically rubbing his hands in anticipation. I want to challenge (Chen), Sheu says with a glint in his eye. I want him to be the one to be trying to get in touch with me.

Sheu stresses that ideally, foreign tobacco companies will be humiliated into compliance with the Tobacco Hazards Control Act. I want to convince them that these are shiao ren (little people) tactics that are unbefitting of large, international companies, he explains.

Taipei citizens, Sheu says, won't have to wait long to see the he effects of his campaign to rid the streets of illegal foreign cigarette promotions. By the end of next month the illegal advertising in Taipei will be gone, he promises. Such success, he says, will be a good example for the Central Government to apply to the rest of Taiwan.

The rest of Taiwan will be able to learn from this Taipei experience at controlling illegal cigarette promotions, he says. Taipei will be the leader and show the rest of Taiwan how it should be done.