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Japan Coast Guard Confirms DPRK Trafficking Counterfeit Cigarettes
Tokyo Tokyo Shimbun
May 15, 2006
The Japan Coast Guard has confirmed through searches of foreign fishing boats that counterfeit Japanese cigarettes are shipped from North Korea to South Korea and Taiwan. It was revealed for the first time that Coast Guard inspectors actually had discovered counterfeit Japanese-brand cigarettes aboard vessels whose last port calls were in North Korea. As a result, the Coast Guard, which did not seize those cigarettes because they were not intended for illegal shipment to Japan, has begun to exchange intelligence with authorities overseas. The United States has called attention to counterfeit cigarettes, warning that [counterfeiting foreign-brand cigarettes] is "North Korea's most profitable illicit trade." The Coast Guard, too, believes that they are replacing stimulants as North Korea's new source of foreign currency.
The Coast Guard conducts a marine security inspection on foreign fishing boats that enter Japan's exclusive economic zone (EEZ). After a shoot-out with a North Korean spy boat off Amami Oshima in Kagoshima Prefecture in late 2001, the Coast Guard carries out such searches in hopes that inspectors will detect primarily amphetamine and other drugs.
According to the Coast Guard, the cargoes of counterfeit cigarettes began to turn up two years ago aboard Cambodian-, Taiwanese, and Mongolian-registered vessels that came from North Korea. The brands of counterfeit cigarettes total more than ten, including Mild Seven and Seven Star from Japan, Marlboro from the United States, and some from the United Kingdom. They apparently package the same low-quality cigarettes in different packs.
According to information obtained from crewmembers and reconnaissance satellites, vessels will typically pick up counterfeit cigarettes for shipment at ports such as Wo'nsan, Ch'o'ngchin, and Rachin, and then take off. They will meet boats for Taiwanese or South Korean underground syndicates in waters off Taiwan or South Korea's Pusan, and shipments change hands on the sea -- mode of delivery called "sedori."
Each vessel carries hundreds of thousands of cigarette cartons. They are sold for 60% of the prices of authentic cigarettes, generating a profit estimated to reach tens of millions of yen.
The reason that [North Koreans] will not smuggle counterfeit cigarettes into Japan is believed to be the marketing hurdle. In Japan, cigarette prices are fixed and most cigarettes are sold via vending machines. According to Japan Tobacco Corp., the Mild Seven lineup became the best-selling cigarettes in Taiwan last year, ahead of Taiwanese competition. The brand has also become a top-five product in South Korea.
Counterfeit Marlboro, which tops the list in terms of shipments, was discovered in 1,300 separate searches in the United States between 2002 and 2005. Since several years ago, when China began to crack down on counterfeit cigarettes, cigarette-manufacturing equipment made its way from China to North Korea, laying down the foundation for mass production.
The latest development reportedly takes place in an anti-government guerilla-controlled area of the Philippines, where North Koreans manufacture counterfeit cigarettes and the guerilla group offers protection for weapons. US pressure and cooperation among coast guards and other law enforcement agencies from different countries have made it much more difficult for North Korea to manufacture and smuggle amphetamines, raising speculation that it has switched to counterfeit cigarettes, which are less likely to be caught.
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