Kenya Insights

Tag: Shapo Trading Ltd

  • Chinese Firm’s Illegal Cigarette Racket Exposed – Banned Brands Still in Kenyan Shops

    Chinese Firm’s Illegal Cigarette Racket Exposed – Banned Brands Still in Kenyan Shops

    Shapo Trading Ltd, a Chinese-owned company based along Mombasa Road, has been thrust into the spotlight following a government crackdown on its alleged illegal importation of harmful cigarette brands into Kenya.

    The Ministry of Health, in collaboration with the Directorate of Criminal Investigations (DCI), recently shut down a Shapo-linked godown after uncovering 1,716 cartons containing 11 unregistered cigarette brands, four of which were entirely absent from the Ministry’s official database.

    The operation, conducted on March 25, 2025, revealed that the illicit cigarettes violated the Tobacco Control Act of 2007 and its 2014 regulations.

    In response, the Tobacco Control Board revoked all clearance letters previously issued to Shapo Trading Ltd in a letter dated April 3, 2025, addressed to the company’s director, Weir Wang.

    The board also suspended the company’s importation license, halting its ability to distribute tobacco products in Kenya.

    Two Chinese nationals linked to the company have been arrested, and Shapo’s operations remain suspended as investigations continue.

    Health Cabinet Secretary Aden Duale described the situation as a serious threat to public health, vowing that the government would not tolerate the influx of substandard products.

    “We are committed to ensuring that only safe and compliant products reach Kenyan consumers,” Duale stated, adding that the matter is under his direct review.

    However, the crackdown has raised troubling questions about oversight at Kenya’s borders.

    Investigations by a local television revealed that two of the banned cigarette brands were still being sold in local supermarkets and small retail shops, casting doubt on the effectiveness of the government’s enforcement measures.

    Two of eleven prohibited cigarette brands were purchased during a verification visit to supermarkets and smaller shops.

    Intelligence reports further suggest that some government officials may be complicit in facilitating smuggling and tax evasion, allowing harmful products to slip through undetected.

    The Kenya Revenue Authority (KRA) has come under scrutiny for failing to flag the illicit imports, prompting calls for greater accountability.

    Shapo Trading Ltd had previously received conditional approval from the Ministry of Health in February 2024 for cigarette imports, following a review of its packaging and labeling.

    The approval, valid for one year, required strict adherence to the Tobacco Control Act, including payment of Solatium Compensation and submission of annual disclosure reports.

    The company was explicitly warned that clearance could be revoked without notice if non-compliance was detected—a warning that proved prescient.

  • Govt Bans 11 Chinese Cigarettes By Shapo Ltd

    Govt Bans 11 Chinese Cigarettes By Shapo Ltd

    The government has banned the importation of 11 Chinese cigarette brands for violating the Tobacco Control Act 2007 and Tobacco Control Regulations 2014.

    Some of the brands include RGD Blue, Huangshan, Harmonization, Septwolves, Naijing, and Guiyang, among others.

    The Tobacco Control Act 2007 provides a legal framework for controlling tobacco products, including their production, sale, labeling, advertising, and sponsorship.

    “On 25th March 2025, a multi-agency team comprising Ministry of Health (MOH) Officials and officers from the Directorate of Criminal Investigation (DCI) visited and inspected your premises,” the Tobacco Control Board Secretary Anthony Wainaina wrote in a letter to KRA Commissioner General.

    “Four (4) brands: (Harmonization, Septwolves, Naijing and Goldenleaf) were not found in the MOH database. Upon further evaluation, all the 11 brands were found to be in violation of the Tobacco Control Act 2007 and Tobacco Control Regulations 2014,” he added.

    In 2024, the Ministry of Health approved the sale of Huanghelou Golden and Huanghelou 1916 Filter cigarettes after a review that showed compliance with the Tobacco Control Act, 2007, and the Tobacco Control Regulations, 2014.

    “The purpose of this letter there is to inform you that all clearance letters issued to your company earlier authorizing the importation of the tobacco products are hereby withdrawn/cancelled and recalled with immediate effect.”

  • Chinese Embassy Dragged as Kenyan Tax Authorities Probe Tobacco Firms For Tax Evasion

    Chinese Embassy Dragged as Kenyan Tax Authorities Probe Tobacco Firms For Tax Evasion

    The Chinese embassy in Nairobi has called in the directors of two local firms linked to China Tobacco, the world’s largest cigarette maker, for questioning amidst an ongoing investigation by the Kenya Revenue Authority (KRA) into potential tax evasion.

    According to sources close to the investigation, KRA’s Investigations & Enforcement unit, which specializes in high-profile financial crimes, has raided the offices and warehouses of Yulees Blooms Company Ltd and Shapo Trading Ltd in Kilimani and on Mombasa Road. This action follows allegations of tax fraud.

    The investigation centers around the distribution of China Tobacco’s brands, Septwolves and Harmonisation, which are part of the company’s extensive product line that generates significant global revenue. The involvement of a state-owned enterprise like China Tobacco in such a probe could have significant reputational implications, especially given China’s current aggressive stance on tax compliance at home, where the government is enforcing strict measures against tax evasion.

    Among those summoned by the embassy is Liu Yuhang, a wealthy Chinese national and a director at Shapo Trading. Both the embassy and Mr. Liu have been unresponsive to requests for comment.

    This investigation coincides with a broader initiative by Chinese authorities to increase revenue collection, particularly in light of economic strains from a prolonged property market slump affecting local government finances and overall economic confidence.

    The KRA’s actions were sparked by a whistle-blower’s claim that Shapo Trading was under-declaring the value of its cigarette imports, thereby reducing the customs duty payable.

    Reports suggest that the companies bypassed using the Electronic Tax Register (ETR) and neglected to stamp excise duty on cigarette packets, flouting key regulatory requirements.

    Initial findings indicate that some of these cartons, approximately 40, may have been smuggled into neighboring countries for sale, further complicating the probe.

    Additionally, there are suspicions that certain government officials may have played a role in enabling the smuggling and evasion tactics, potentially undermining the local tobacco industry and the livelihoods of local farmers.

    An official from KRA confirmed the raids but emphasized the confidentiality of the investigation, citing the Tax Procedures Act of 2015 which limits information sharing.

    Shapo Trading Ltd is known for importing the Septwolves and Harmonisation cigarette brands into Kenya, with distribution extending to Uganda and Tanzania. Yulees Blooms acts as the local sales agent, handling distribution across the region.

    The surge in consumption of Chinese-made cigarettes in East Africa is partly due to the growing presence of Chinese nationals in the area, some of whom engage in retail sales. This increase in demand coincides with President William Ruto’s administration’s intensified efforts to curb tax evasion, especially after the contentious withdrawal of this year’s finance bill due to public unrest.

    As the investigation continues, it underscores the complexities of international business operations and tax obligations, particularly in a context where state-owned enterprises are involved.