for cigarettes exported by the United States and some Asian traders made the setting more competitive for imports by countries in the Far East. Greater output of quality brands by more countries tended to limit prospects for major exporters to make sales in some countries of Southeast Asia. Yet, total cigarette imports by Far East markets remained strong in early 2006, in the range of 183 bn pieces. Far East cigarette imports were valued at about $4.3 bn annually during 2003-05, compared with $5.1 bn in 2000. Lower prices for U.S. cigarette exports to Japan tended to limit prospects for an increase in the value of the regionís trade in 2006.
A major share of the total Far East cigarette import decline in the recent decade stemmed from the way imports into Singapore tumbled from $1.08 bn in 1997 to $293 mn by 2004, and remained at a low level in 2005. Japanís cigarette imports averaged about $2.1 bn annually during 2003-05, and the value may rise slightly during 2006. An increase for the value of Japanís cigarette imports in 2006 is likely to be offset by a lower value for imports into some countries in Southeast Asia.
Imports More than Double Regional Cigarette Exports: Japan is the leading world cigarette importer and its large imports contribute to the net import position for Far East cigarette trade. Imports of cigarettes into the Far East averaged about $4.3 bn annually during 2003-05, while exports had an average of about $2 bn annually.
Japanís Cigarette Imports Up during the Last Two Years: Japan has no import duty for cigarettes. U.S. cigarette exports to Japan were up in early 2006, and the pace of shipments slowed down in the summer. Deliveries of German cigarette exports to Japan also showed an upward trend recently. The value for total cigarette imports into Japan showed an upward trend from $2.1 bn in 2001 to $2.35 bn in 2004.
Total cigarette imports into Japan may rise to over 87 bn pieces in 2006 because of large deliveries from the United States and Germany. U.S. cigarette exports to Japan increased from 71 bn pieces in 2004 to 83 bn in 2005, and advanced by 3% during January-August 2006. The average price for U.S. cigarette exports to Japan declined from 50 cents per pack of 20 in 2000 to 31 cents in 2001, and averaged about 23 cents per pack during 2002-05.
The U.S. share for Japanís cigarette imports usually exceeded 95% during 2000-04, but may drop to a range of 90% for 2006 as the German share rises above the 2002-04 level. South Korea and Switzerland may also seek to export more cigarettes to Japan this year. UK cigarette exports to Japan declined from a peak of $11.8 mn in 2003 to $7.7 mn in 2004, and were hampered in 2005 by low prices for U.S. deliveries.
Japanís cigarette exports were relatively steady in the last five years in the range of 20 bn pieces annually. Taiwan usually accounted for about half of Japanís cigarette exports. Hong Kong, Singapore, China, and the Middle East are significant markets. U.S. imports of cigarettes from Japan declined 94.6% in January-August 2006 to $458,000, following the downward trend from the peak value of $29 mn in 2002.
Hong Kongís Cigarette Trade Stabilizes after Declining Sharply in the Late 1990s: Hong Kong remained the second major Far East cigarette importer, and a rebound surfaced when imports increased a tenth to $445 mn. The value for Hong Kongís cigarette imports declined from $742 mn in 1997 to a low of $407 mn in 2003. UK cigarette exports to Hong Kong declined from $42.5 mn in 2003 to $35.5 mn in 2004, but remained strong in 2005 deliveries.
High excise taxes cause retail prices for cigarettes to be relatively high in Hong Kong, with an average of over $3.50 per pack of 20. U.S. cigarette exports to Hong Kong declined from 2.78 bn pieces in 2003 to 2.09 bn pieces by 2005, and then fell 32% during January-August 2006. The average price for U.S. cigarette exports to Hong Kong declined from 45 cents per pack of 20 in 2000 to an average of about 23 cents per pack annually during 2002-04, before dropping to 17 cents per pack in 2005. China and some other Asian countries have also maintained substantial shipments to Hong Kong.
Hong Kongís cigarette exports increased from $527 mn in 2003 to $594 mn in 2004, with expanded sales to Southeast Asia. Nanyang Company has increased cigarette exports to markets in Southeast Asia in recent years, particularly to Vietnam.
China Strives to Engineer a Rebound for Cigarette Exports: During the late 1990s Chinaís cigarette exports increased to a range of $700 mn annually. Smaller shipments to Hong Kongís traders, combined with competition from domestic manufacturers in Southeast Asia, caused Chinaís cigarette exports to decline.
With the help of more high-quality brands, Chinaís cigarette manufacturers seek to have a rebound for exports.
Chinaís cigarette exports during 2003-05 averaged about $240 mn. Hong Kong, Myanmar, Vietnam, Singapore, and Mongolia were important markets. The export of 8,200 tons of U.S. tobacco valued at $52 mn in January-August 2006 indicates that China is manufacturing more quality cigarettes for both the domestic market and for export. Chinaís cigarette exports were much higher in early 2005 than the 16.5 bn pieces exported in 2004.
Chinaís cigarette exports to UAE increased to 2.96 bn pieces in 2004, thus closely rivaling the 3.17 bn pieces shipped to Hong Kong. China exported 1.33 bn cigarettes to Singapore and 1.22 bn pieces to the United States in 2004. Myanmar had been a much larger customer for Chinaís cigarettes during 1999-03 than the 920 mn pieces shipped in 2004. Japan was a customer for 715 mn cigarettes from China in 2004 and a similar volume in 2005. Panama was a customer for 696 mn cigarettes from China in 2004, and operations by Chinese of firms dealing with the Panama Canal caused substantial shipments to continue in 2005 and early 2006.
Taiwanís Cigarette Imports Were Higher in the Past: Taiwanís cigarette imports declined from the peak of 23.5 bn pieces in 2001 to an average of 20 bn during 2002-05. Japan maintained exports of cigarettes to Taiwan in the range of 10 bn pieces during 2002-05. German cigarette exports to Taiwan increased by a ninth to 4.5 bn in 2005.
Taiwan imports about half of the cigarettes sold in stores. Japan, UK, Germany, and the United States are major suppliers. UK cigarette exports to Taiwan declined from $34.9 mn in 2002 to $25.3 mn in 2003, before rebounding to $29.4 mn in 2004. U.S. cigarette exports to Taiwan declined from 2.15 bn pieces in 2003 to 1.5 bn pieces in 2005, when the average export price was 22 cents per pack of 20.
Greater Output of Quality Brands in Southeast Asia Contributed to Singaporeís Declining Cigarette Trade: Singaporeís cigarette trade declined in recent years. Manufacturers in other countries produced more quality brands and competition for exporters from Singapore was greater. This meant a steep decline for Singaporeís imports of cigarettes for distribution to customers in other countries. The value for cigarette imports into Singapore declined from $1.31 bn in 1997 to a low of $237.5 mn by 2003, before nudging up to $354 mn by 2004. Most of the decline stemmed from smaller UK deliveries. UK cigarette exports to Singapore declined from $35.5 mn in 2002 to $14.5 mn in 2004, and were again at a lower level in 2005. U.S. cigarette exports to Singapore declined from 2.47 bn pieces in 2002 to 750 mn pieces by 2005. A further decline was reported for U.S. cigarette exports to Singapore during early 2006.
Exports and re-exports of cigarettes from Singapore declined from a peak of $1.08 bn in 1997 to a low of $347.5 mn by 2003, before making a small rebound to $354.4 mn in 2004. Some of the cigarettes shipped from Singapore to Batam Island (a part of Indonesia) were not reported in the official trade reports from Jakarta. Arrangements through the Association of Southeast Asian Nations (ASEAN) made legal cigarette imports from member countries easier, and the transit traders distributing cigarettes from European suppliers found it more difficult to maintain their previous trade patterns.
Many ships stop in Singapore to buy supplies at attractive prices. The relatively large trade in consumer goods has not held up for cigarettes. Exports of cigarettes from Singapore to ASEAN members declined partly because of competition from Philippines and Hong Kong.
Indonesia Leads the World for Exports of Clove Cigarettes: In early 2005, Philip Morris International announced the acquisition of PT Hanjaya Mandala Sampoerna, the third largest manufacturer of tobacco products in Indonesia, for $5.2 bn. The company produces more than 40 bn kretek cigarettes annually. The largest factories are located in Surabaya. Philip Morris was already the only producer of white cigarettes in Indonesia.
The acquisition is not likely to have much impact on cigarette imports into Indonesia, partly because of high duties. Exports of cigarettes from Indonesia averaged about $155 mn annually during 2003-05, compared with $101 mn in 1998, and a peak of $172.7 mn in 2001.
Indonesia provides most of the kretek or clove cigarettes imported into the United States. U.S. imports of clove cigarettes from Indonesia increased 23.9% during January-August 2006 to $8.1 mn.
Malaysiaís Cigarette Exports Show Upward Trend: Exports of cigarettes from Malaysia increased from $17.5 mn in 1998 to an average of about $53 mn during 2003-05. A sharp rise in the excise tax in 2004 contributed to greater exports. British American Tobacco Malaysia, the leading manufacturer, reduced prices for some premium brands in 2004 to help smokers to cushion the higher excise tax. JTI also reduced prices of certain brands. Blended brands account for over half of the cigarette sales in Malaysia. Philip Morris introduced some new brands to maintain market share in the competitive Malaysian market.
Thai Cigarette Imports Showed Upward Trend in Recent Years: Imports of cigarettes into Thailand increased from 7.7 bn pieces in 2003 to 12.6 bn in 2005. Demand for imported cigarettes remains strong in Bangkok, and other ASEAN countries have been major suppliers of quality brands. Malaysia, Singapore, and Indonesia are key suppliers of imported cigarettes marketed in Thailand. Thailandís cigarette industry is dominated by the Thailand Tobacco Monopoly (TTM), which provides approximately 80% of the national cigarette output of about 35 bn pieces annually.
Philippine Cigarette Exports Up Sharply, While Imports Fall Far Below Earlier Levels: Philippine cigarette exports doubled in value during 2004, reaching $99 mn. The low price for cigarettes exported by Philippines attracted more customers in Southeast Asia and the Middle East. U.S. imports of Philippine cigarettes declined about a fourth in January-August 2006 to $1.4 mn.
Increased output of a wide range of brands reduced demand for imports. Before import duties increased, Philippine cigarette imports reached a value of $365 mn in 2003, compared with $107.8 mn in 2003, and tumbled to $22 mn by 2004. China shipped 428 mn cigarettes to Philippines in 2004.
South Koreaís Cigarette Export Boom Slowed Slightly after 2003: Exports of cigarettes from South Korea increased from an average of $17 mn annually during 1998-00 to a peak of $231 mn by 2003, but then edged down to $225.6 mn in 2004. The boom for South Korean cigarette exports stemmed partly from astonishing gains for new sales to markets in Central Asia during 2002 and 2003. By 2004 competition from European exporters increased. The surplus of cigarettes manufactured in Russia contributed to greater deliveries to CIS countries of Central Asia where the favorable prices of cigarettes made in Korea had triggered large sales.
Higher import duties led to a decline in imports of cigarettes by South Korea from $252 mn in 2002 to $84.8 mn in 2003, and then to $31.6 mn by 2004. Exports of cigarettes from the United States to South Korea declined sharply between 2002 and 2005. UK cigarette exports to South Korea nosedived from $109 mn in 2002 to $7.8 mn in 2003, and then to only $340,000 in 2004.
North Koreaís Cigarette Imports Declined in 2004: Imports of cigarettes into North Korea declined from 1.1 bn pieces in 2003 to about 959 mn pieces in 2004. China, Hong Kong, and Japan were major suppliers. Exports of cigarettes from China to North Korea were 630 mn pieces and the trade remained strong in 2005. During the 1980s North Korea had fluctuating exports of leaf tobacco to Russia, but that trade faded in recent years.
Vietnamís Cigarette Output Rising with the Help of Greater Leaf Tobacco Imports: Vietnamís cigarette imports declined from a peak of 13 bn pieces in 1998 to a low of 6.7 bn by 2003, before rebounding to 10.5 bn in 2004. Import of leaf tobacco from China increased in recent years as cigarette output in Vietnam increased. Imports of U.S. tobacco also advanced. Vietnam also expanded imports of U.S. flue-cured tobacco as the value exceeded $1 mn in 2005.
Greater output of cigarettes from factories operated in cooperation with multinationals contributed to a rise in Vietnamís cigarette exports. Exports of cigarettes from Vietnam reached 511 mn pieces by 2004 ó more than double the 2002 level. The opportunity to make duty-free shipments to some other ASEAN markets contributed to the rise.
Cambodiaís Cigarette Imports Show Upward Trend: Total cigarette imports into Cambodia increased about a fifth in 2004 to about 17.8 bn pieces. Cambodia has been a leading customer for Indonesiaís cigarette exports in recent years. Cigarette exports from Philippines to Cambodia increased in 2004 and remained strong in 2005.
Laos Reports Rebound for Cigarette Imports: Imports of cigarettes reported by Laos declined from 1.06 bn pieces in 1999 to a low of 97 mn pieces in 2003, before a rebound to 486 mn pieces in 2004. Apparently the availability of quality cigarettes from Vietnam at a reasonable price contributed to the 2004 rebound. Further gains for deliveries of cigarettes from neighboring countries are likely as farmers gain more income from increased agricultural exports.
Cigarette Imports into Myanmar Trended Downward during 1998-04: Myanmar was a much larger cigarette importer a decade ago, before domestic output expanded. The quantity of cigarette imports reported by Myanmar fell from 3.7 bn pieces in 1998 to about 1 bn pieces by 2004. Imports of cigarettes into Myanmar fell from $138 mn in 1998 to an average of about $20 mn during 2003-05. Exports of cigarettes from Myanmar averaged about $133,000 annually during 1998-00, compared with an average of about $6.7 mn during 2002-04.
German Cigarette Exports to Far East Flourished in 2005: German cigarette exports to Far East markets increased in 2005 to a new peak. Shipments to Japan reached 7.5 billion pieces valued at $109.9 mn, compared with 1.5 bn pieces for $15.9 mn in 2003. The increase for 2005 shipments to Japan over the 1.6 billion shipped in 2004 was astronomical.
Taiwan was often the leading destination for German cigarettes to the Far East in the 1990s, and even through 2004, before Japan moved into the lead in 2005. German cigarette exports to Taiwan declined from 4 bn pieces in 2004, valued at $99 mn, to 3.7 bn pieces by 2005, and the value edged downward to $93 mn.
Singaporeís total cigarette imports declined in the recent decade, mostly because of smaller deliveries from the UK. German shipments of cigarettes to Singapore increased from 445 mn pieces in 2003 for $6.6 mn to 751.5 mn pieces valued at $20.9 mn by 2005.
Malaysia was a market for 19.7 mn German cigarettes valued at $515,000 in 2005, compared with 7.1 mn pieces for $137,000 in 2003.
German cigarette exports to Hong Kong reached 887 mn pieces in 2005, valued at $21.5 mn, a level nearly double the 2003 shipments of 523 mn pieces for $11.2 mn. Macau emerged as a much larger customer for German cigarettes in 2005 with shipments of 51 mn pieces for $2.3 mn, compared with deliveries valued at $17,000 in 2004.
German cigarette exports to South Korea plummeted from 662 mn pieces valued at $7.8 mn in 2003 to only 17 mn pieces for $245,000 by 2005.
Thailand was a market for 38 mn German cigarettes valued at $618,000 in 2005, compared with the delivery of 16 mn pieces for $326,000 in 2003. Many European tourists visit Thailand, contributing to increased sales of German and Swiss cigarettes in stores in Bangkok and resorts.
German exports of cigarettes to the Philippines opened with the shipment of 38.6 mn pieces valued at $426,000 in 2005. Exports of cigarettes from Philippines to Asian markets increased sharply in 2004, and imports of premium brands from Europe tended to face fewer barriers by 2005.