II. TOBACCO.
1. The net duty collected showed an increase of $245,149. This was due to an increase of duty made in the middle of the year and was in accordance with anticipations. Licence fees showed a small decrease. Doubtless a year's experience of the higher rates induced a certain number to refrain from renewing in 1930.
2. Smuggling of cigarettes was not very prominent, Macau being the only source from which cigarettes could be obtained.
3. Smuggling of Chinese manufactured tobacco was carried on on an extensive scale especially across the land frontier of the New Territory. The smuggled tobacco emanated from factories at Sham Chun across the border which maintained branch factories at Yuen Long. These factories had been paying very little duty for some years and yet appeared to be doing a good business in manufactured tobacco. It was observed that the bales of raw tobacco leaf on the premises on which duty had been paid seemed to last a miraculously long time, in spite of the brisk business which appeared to be carried on. Finally certain seizures of tobacco in Yaumati led to the exposure of the method by which the smuggling was being conducted. Tobacco was brought to Yuen Long from China by junk without paying duty, and was at once sent in by lorry or sampan to Yaumati, covered by delivery notes from some of the licensed factories at Yuen Long. In one case the persons concerned at Yuen Long absconded, in others it proved impossible to bring the offence home.
4. The Police in the Northern District did specially good work during the year in dealing with tobacco smuggling, and seized 1,958 pounds in all.
5. The factory of the Nanyang Brothers at Wanchai was busily employed during the year, but the effect of the new Chinese tariff on their operations is causing the management some concern at present.
6. The British Cigarette Company opened a factory at Wanchai, but since they had first to train a new staff and to get the machinery in proper working order and properly understood by the new staff, operations were necessarily restricted. The most modern machinery has been installed, and there is room for considerable expansion as soon as circumstances demand.
7. The benefits of low exchange and the reduction of the value of the local currency to silver parity do not appear to have had any effect on the demand outside the Colony for the products of the local cigar factories, some of which reach a high standard of quality. It is not yet generally known that a good cigar can be made from selected Manila leaf just as well in Hong Kong as in Manila, and at a lower price.