A cigarette seller who ran afoul of China’s strictly regulated tobacco industry by trading in an area where she was not licensed received a 10-year prison sentence earlier this year, but the country’s legal community isn’t convinced the verdict was justified.
In January 2015, police searched Yang Xiayu’s truck and found 2,200 cartons of cigarettes. Yang, 49, and her husband ran a convenience store in the eastern province of Shandong, where they were licensed to sell tobacco products. But several months earlier, they had started a profitable side-business supplying cigarettes to other vendors in Yang’s hometown of Hangzhou, also in eastern China, without being licensed to do so, China Youth Daily reported Thursday.
In China, tobacco production is effectively a government monopoly. The market, worth some 1.4 trillion yuan ($210 billion) in sales in 2015, is tightly regulated and highly taxed, and has strict licensing criteria for wholesalers and retailers.
Many tobacco salespeople violate their licenses when they discover opportunities to profit — as Yang and her husband did when they realized certain cigarette brands in Hangzhou are hard to come by. They bought tobacco products in excess of their quota from suppliers they weren’t licensed to buy from, and sold the cigarettes outside of their area in quantities larger than allowed.
Legal cases like Yang’s are common, but the 10-year sentence is exceptionally harsh, her laywer, Liang Guo, told Sixth Tone.
Liang said his client definitely exceeded the scope of her license, although he and other lawyers argue that she should have been punished according to the regulations of the tobacco industry — which would call for her to be fined, for her business to be closed, and for any illegal profits to be confiscated. “This is not a criminal case,” Liang said.
In January of this year, a district court in Hangzhou convicted Yang to 10 years imprisonment for the crime of operating an illegal business. Her husband, who also sold cigarettes illegally, died in 2015. On appeal, an intermediate court upheld the verdict. Liang said they have appealed again, and that the same intermediate court accepted the case on July 6.
Central to Yang’s case is an apparent contradiction between two documents from China’s Supreme People’s Court, the country’s highest legal authority. Articles in China’s criminal law concerning the operation of illegal businesses do not specifically mention the tobacco industry. In 2010, the supreme court said in an official document that unlicensed tobacco companies and retailers should be regarded as illegal businesses.
In 2011, a local court in Jiangsu province, eastern China, heard the case of a man with only a retail license selling cartons of cigarettes at wholesale quantities. The lower court asked the supreme court to clarify whether this qualified as an “illegal business.” It did not, according to the higher court, and so the man’s case was dropped.
Yang’s lawyer, Liang, said that although he referred to this case during his client’s defense, the supreme court’s 2011 opinion was ignored because, the court argued it contradicted the 2010 statement and only applied to one case. “It’s ridiculous for a low-level court to judge the supreme court’s documents,” Liang said.
On July 26, the Central University of Finance and Economics in Beijing organized a seminar during which legal scholars and lawyers discussed Yang’s case. Guo Hua, a professor at the university, reportedly argued that the local court should have asked superior courts for clarification instead of making its own decision.
And Ruan Qilin, a professor at China University of Political Science and Law, said during the seminar that since all the cigarettes Yang sold were from a legal source, the government did not lose any tax revenue, and consumers’ legal rights were not infringed upon. Ruan added that Yang’s actions shouldn’t be regarded as criminal because she satisfied a market demand and helped the tobacco industry increase its sales.
Li Dawei of Jingsh Law Firm in Beijing told Sixth Tone that over the past three years, he has researched nearly 2,000 cases involving the tobacco industry. He said verdicts for retailers who violate their licenses vary across provinces. In some places, all defendants were acquitted, but elsewhere the majority was convicted.
“These figures illustrate the uneven application of the law in cases of illegal tobacco sales,” Li said, adding that the same judicial inconsistency can also be seen for other industries. “This affects the credibility of the judiciary in the eyes of the public,” Li said.
Editor: Kevin Schoenmakers.
(Header image: A shopper holds a pack of Taishan brand cigarettes in Liaocheng, Shandong province, May 10, 2015. Zhao Yuguo/VCG)