|This Marlboro is an obvious fake. Most are not.|
Cigarette smuggling has increased in places like New York, especially since the state raised taxes. A typical pack of cigarettes costs about $10 in New York City. If you load a car with cigarettes in a low-tax state like Virginia, you could make $30,000 in profit selling them in New York.
Altria also wants the Seneca, a nearby Native American tribe, to stop selling tax-free cigarettes. You could buy a carton of cigarettes there for $50, and resell them for $100 at a convenience store.
Also a big problem: completely counterfeit cigarettes from China, which makes 99% of all counterfeits. A pack of fake smokes only costs 20 cents to make in China. And counterfeiters make separate versions of Marlboros for each market - with authentic-looking tax stamps and regional health warnings.
A 40-foot shipping container of cigarettes can be produced in China for $100,000. Smuggled into the U.S., it'll sell for up to $2 million on the street.
Fake Chinese smokes sent to Russia have produced this interesting fact, said a Chinese police officer:
"The feedback from Russian customers is that they've gotten used to the fake flavor, and now they don't want the real ones anymore."I'm sure American cigarette manufacturers do not want to hear that.
Business Week article>>
Article by Te-Ping Chen, the short version, at Slate>>
Article by Te-Ping Chen, the long version, from the Tobacco Underground, a project of the International Consortium of Investigative Journalists>>
This version includes more details about the way counterfeiting works in China, and why Chinese manufacturers hide their operations underground. (It's the same as many illegal marijuana operations - because of the smell.)