4
5
487
The following figures are given by the tobacco company in support of this contention.
"Red sweetheart" branch is manufactured at both factories.
Present cost of production at Shanghai
Freight and charges to Mukden
Average cost of production at Mukden
Dol.
47 65 4 33
51 98
56 72
A difference in favour of Pootung of.. If 3 per cent. duty is added..
4 74
2 83
7 56
at i... it would cost 7 dols. 56 c. more to turn out a case of "red sweetheart Mukden than to bring the case from Shanghai and put it on the Mukden market.
It is to be presumed that the cost of production at Mukden would gradually be reduced, but in any case the products could not pay
per cent.
5
Dol. c.
4 33
3 00
1 38
E.g., cost of shipping one case to Mukden is (including duty) Cost of shipping leaf and material so that the cigarettes may be made at
Mukden
+
Difference in favour of Mukden
Hence it seems clear that if the Mukden duty exceeds 1 dol. 33 c., the Mukden factory cannot compete with Pootung in the treaty marts in Manchuria, even if cost of production becomes equal.
The trade in Manchuria in non-treaty marts is inconsiderable, and hence the advantage the Mukden factory would gain by payment of 5 per cent. here against the ordinary i-kin payable by the Pootung factory is so small that it may be neglected.
His Britannic Majesty's Consul-General is unable on his own responsibility to assent to any proposal but the Pootung terms, but if the commissioner will submit a compromise to him he is willing to refer it for the consideration of His Majesty's Minister.
He would ask the commissioner to consider the following proposals :----
1. Pootung terms to be granted for cigarettes made in Mukden and shipped to any treaty port or interior place in China proper.
2. A uniform tax of 1 tael per picul on all goods sold in Manchuria irrespective of treaty or non-treaty mart.
Clause 1 is essential.
As regards clause 2, this is an increase of 325 tael per picul on the Pootung terms for goods shipped to treaty ports, or very nearly 50 per cent. The trade to non-treaty marts is infinitesimal at present.
Note. The present sales of the tobacco company in Manchuria are estimated roughly at 2,000 cases a-month, not more than one tenth of which are produced by the Mukden factory.
and to receive a pass under which they may be transported to other treaty marts without further payment.
2. Outside the limits of the treaty-marts, whether the goods are in the hands of Chinese or foreigners, local taxation must be paid in accordance with the regulation of the province.
3. Cigarettes not made at Mukden but imported from other ports, having paid the export duty, must, in accordance with existing regulations, continue to pay the half- duty, and if not in possession of documents proving such payment, must submit to be fined.
4. Goods made in the Mukden factory for export to other provinces outside Manchuria, for example Tien-tsin, to pay 45 tacl per picul on leaving the factory, and to receive a stamped document.
As to this clause, and as to the arrangement for issuing the documents, whether by the Mukden Commissioner of Customs or other authority, it will be necessary to wait until the Viceroy has referred the matter to the Revenue Council.
5. Other British merchants bringing cigarettes into Manchuria which are not made in Mukden must pay duties in accordance with existing regulations.
6. Native products purchased in Manchuria by the tobacco company must pay duty in accordance with existing or future regulations.
7. Should there in future be a general revision of the taxation imposed on cigarettes in China, this scheme must be submitted for alteration at the same time.
The above proposals are now submitted by the commissioner for consideration. If the consul-general is in agreement with them, the commissioner would ask for a reply, so that he may be in position to ask the Viceroy for his approval.
Enclosure 5 in No. 1.
Acting Consul-General Willis to Sir J. Jordan.
(No. 3.) Sir,
Mukden, January 11, 1911. WITH reference to the concluding paragraph of my immediately preceding despatch, I have the honour to state that Mr. Heuckendorff, the local manager of the British and American Tobacco Company, called on me yesterday afternoon and informed me that he had telegraphed my views to the London directors of the company. He was in receipt of their reply, which was to the effect that they saw no reason why they should pay an increased tax in Manchurian open marts, unless they gained some advantage in the interior, and they therefore wished to obtain the same arrangement for their Mukden factory as for their other establishments in China.
I again told Mr. Heuckendorff that in this case it was quite useless for me to make any further representations here, and that the legation was fully informed of the details
my recent negotiations.
of
I would, however, request your instructions as to the sense in which I should answer Mr. Han's despatch of the 30th ultimo.
I am forwarding herewith copy of the Chinese text of this letter, which was inadvertently omitted from my previous despatch.
I have, &c.
ROBERT WILLIS,
(Translation) Sir,
Enclosure 4 in No. 1.
Mr. Han to Acting Consul-General Willis,
Mukden, December 30, 1910, WITH the reference to the long outstanding question of the taxation to be levied on the products of the Mukden factory of the British-American Tobacco Company, in view of the special conditions in Manchuria. I now have the honour to suggest the following scheme :--
1. The open marts in Manchuria are numerous, and situated not far from one another; there are, further, no li-kin barriers between them, and the conditions are not similar to those at Shanghai and Hankow. Products of the Mukden factory on export from Mukden to points within the limits of the Manchurian open marts therefore to pay a single tax of 1 tael per picul on leaving the Mukden factory,