CO129-382 - Public Offices - 1911 — Page 395

[This Document is the Property of His Britannic Majesty's Government.]

AFFAIRS OF CHINA,

CONFIDENTIAL.

393

C 0 7234

[January 14.]

SECTION 2.

[1593]

No. 1.

British-American Tobacco Company to Sir Edward Grey. Received January 14.) Sir,

Cecil Chambers, 86, Strand, London, January 13, 1911. WE are addressing you on behalf of British Cigarette Company, Limited, with reference to a duty proposed to be placed by the Chinese authorities on goods manufactured in Mukden, Manchuria, and sold in Manchurian treaty ports.

British Cigarette Company, Limited, is a company registered in Hong Kong, and is the owner of factories in several places in China, the principal ones being at Pootung (Shanghai) and Hankow. We hold practically all the shares in this

company.

Some years ago we took up the matter of duty to be levied on cigarettes manufactured in China, and were able, through the courtesy of His Majesty's representative in China, to obtain a clear ruling as to the rate of duty to be paid on cigarettes manufactured in China. We enclose copy of letter addressed by Prince Ching to Sir Ernest Satow, dated the 26th December, 1904. In the letter, you will observe that the duty was fixed at 4 mace 5 candereens per 100 catties plust 2 mace 2 candereens per 100 catties if exported to another treaty port. This, you will observe, is equivalent to 675 taels per picul.

On the understanding that the duty was fixed, British Cigarette Company, Limited, acquired a piece of land in Mukden and erected a factory for the manufacture of cigarettes. That company has been considerably troubled as to the rate of duty on such goods. The authorities claim 1 tael per picul against 675 taels per picul, as established by the letter above mentioned.

You will therefore observe that it is proposed to penalise the goods manufactured at Mukden to the extent of 50 per cent. more than Pootung and Hankow manufactured goods for the same destination.

We may add that if the Chinese authorities insist upon imposing this duty, which we consider is in contravention to the treaty of 1859, it will probably be necessary for British Cigarette Company, Limited, to close the Mukden factory, which will entail that company in a serious loss.

The representatives of the company in China are approaching His Majesty's Ambassador at Peking, and we have been asked to address you in the hope that you can see your way to cable (at our expense) to His Majesty's Ambassador at Peking, asking him to take the matter up with the authorities in Peking, in order that the basis of taxation as agreed by Prince Ch'ing in 1904 may not be departed from, as it was with this arrangement, in mind that we invested considerable additional amounts in factories in China through the British Cigarette Company, Limited.

We have, &c. (British-American Tobacco Company),

A. G. JEFFRESS, Director.

Enclosure in No. 1.

Prince Ch'ing to Sir E. Satow.

Your Excellency,

Peking, December 26, 1904. I HAVE the honour to acknowledge the receipt of your Excellency's note of the 13th December on the subject of export duty on cigarettes manufactured at Shanghai.

(Note summarised.)

My board have to observe that cigarettes are manufactured from " yenssu (prepared tobacco), but cannot themselves continue to be called by the latter name,

Export duty.

[1850 -2]

+ Coast trade duty,