>>this week on world business a look back at some of the best stories of the last year including >>trouble with tobacco, china's cigarette industry generates billion in tax, but also takes a massive toll on the chinese population. >>smoking in the poor actually displaces spending on education and medical care >>half full hives - the economic impact to the world if bees buzz off >>taken on the global scale, honey bees are absolutely fundamental pollinators. >>not quite a model business, why the recession has been tough for miniature makers. >>we've probably lost two thirds or three quarters of our staff. >>hello and welcome. i'm raya

abirached and this is world business, your weekly insight into the global business trends shaping our lives. this week we are looking back at some of the best stories of the past year. tobacco is one of china's most powerful state monopolies. the industry provides eightpercent of the country's tax take and invests heavily in rural roads and reservoirs. but the business also kills over a million chinese people every year. >>reporter: you'll get short shrift lecturing farmers in jinzishan village on china's huge tobacco death toll. that's because, for almost all of the 1600 households here in rural chongqing, the leaf is their primary cash crop - by far. zhong dexiu's plot is about the same size

as a soccer pitch. and this provides an annual income of around 3000 us dollars - equivalent to working day-in-day-out in a township factory. >> dexiu: we started planting tobacco the year before last. for us, we make about the same as goingout to work - but here, life is more flexible. >>reporter: she knows that per hectare, tobacco pays around three times more than growing grain or vegetables - though judging by her hands, she appears unaware of the health risks posed by nicotine absorption. >>in 2007, 22 million chinese tobacco farmers produced 40 percent of the world's crop. most of the harvest goes to domestic cigarette factories. though like other developing countries, exports are growing; in china's case, by over 10 percent annually and are now worth 400 million us dollars. >>reporter: in 2008, china's 100 factories produced a total of two trillion cigarettes. and the complete industry,

from farm to point of sale - including any foreign backed ventures and imports of high quality leaf - is tightly controlled by the state tobacco monopoly. this is a huge organisation - with half a million employees. >>nick mackie: tobacco provides china's treasury with its biggest single revenue source: 66 billiondollars in 2008, 8.3 percent of the total tax take. in addition, the state monopoly also invests heavily in rural communities. over the past four years,it's built 8,000 kilometres of village roads and 7,000 kilometres of irrigation channels. >>reporter: the industry, however, shuns repeated requests to discuss its performance. and there could be two reasons why. >>the state tobacco monopoly and, indeed, foreign treasuries, share a common enemy - counterfeiters. >>reporter: fujian province in south east china is the world's leading production base for fake cigarette brands.

much of the tobacco comes from laos and yunnan, while copycats in nearby guangzhou provide perfect packaging for the domestic and even global markets. as a container can carry 10 million cigarettes, the european union's anti fraud office believes thatcounterfeiting deprives the eu's coffers of hundreds of millions of euros annually. pulkkinen: in member states such as uk and ireland where duties and taxes are higher it can be up to three million euros per container. and if we're talking about a few hundred containers per year, it's a very significant number. >>reporter: and a significant player in the fake trade is yunxiao. there's more to this fujian backwater than meets the eye. dotted among the hills on the outskirts, some 200 illegal cigarette production lines are said to operate from near invisible caves and underground bunkers. >>mackie: it may seem unlikely, but yunxiao is

reportedly the main production base for a multibillion dollar counterfeiting industry - the source of around half of the country's estimated annual order book of 400 billion counterfeit cigarettes. >>reporter: this trade is highly lucrative. it costs around 100,000 dollars to stuff a container with fakes - but this has a typical street value of two million in europe or the us. the chinese authorities have ongoing crackdowns- but with limited success, as highly organised gangspay well for tip-offs and protection. >>reporter: but the legal and illegal industries are priming a chinese health time bomb. three hundred and fifty million chinese now smoke: mostly 60 percent of the adult male population. and this resultin a staggering tobacco related death toll of a million plus people annually. there's little in the way of robust anti smoking policies - even though the country has signed up tothe world health organisation's framework on tobacco control.

england: at the highest levels, china has accepted this. but that doesn't mean that everyone is fully aware. and as you've noticed on cigarette packs in china, the warnings are relatively weak. so the general public needs to be made more aware of all the risks they're taking through smoking. >>reporter: up against a powerful state entity - not to mention governors of tobacco growing regions - this is easier said than done. and take everyday social relations: cartons of perversely evocative sounding brands like double happiness are commonly presented to officials, even doctors to secure favourable treatment. >>but there's little chinese government cash to pay for information campaigns. some groups even rely on funding from overseas. chengbin: we normally co-operate with foreign ngo's on special projects - and for this, we get funding. >>reporter: the industry

however also propagates quack theories: like cigarettes eliminate loneliness and strengthen women's social equality. >>village mothers, however, know only too well about inequality. according to a university of california study, cigarettes account for over 11 percent of rural household expenditures. >>england: smoking in the poor actually displaces spending on education and medical care - and if people can be convinced to quit smoking, their lives will improve. >>reporter: like so many countries, china' policies are often shaped by a trade-off - where clout is determined by clearly visible economic weight. but over issues like counterfeiting and public health, the country appears in denial. behind the smokescreen there's a dire economic health warning. china loses two percent of its gdp to tobaccrelated illness - and premature deaths

from smoking are expected to exceed two million by 2020. >>the drone of honeybees is one of the classic sounds of summer, but over recent years it has been asound we have been hearing less and less. across the world bee populations have been in rapid decline. this isn't just a problem for honey lovers; it could have disastrous economic implications for us all. >>reporter: busy bees buzzing from their hives. as summer fades, their work collecting nectar to feed a new generation of honey makers is almost over for another year. but in the uk, honeybee numbersare falling fast. and nowadays when beekeepers check their colonies they dread the scale of lossesthey'll find. >>lovett: we were at over thirty per cent, and in some areas in the country way way more than that and that's very serious, you're losing nearly a third of your colonies.

>>reporter: the decline led to a 50 per cent drop in home-produced honey, which ran out in the shops by christmas last year. but there's a great deal more at stake than a teatime treat when it comes to the health of bees. >>lovett: it isn't just about honey, it's about pollination and the whole nation depends on pollination and taken on the global scale, honey bees are absolutely fundamental pollinators. >>reporter: no-one knows better than farmers the importance of bees to growing crops. >>hartfield: things like apples and soft fruit, for those crops pollination is very much dependent upon honey bees, probably around ninety per cent dependent. >>reporter: honey bees contribute three hundred million dollars worth of crop pollinations to the agricultural economy in the uk and are estimated to carry out half of the pollination of other plants, on which ultimately all the rest of wildlife depends. >>baldwin: bees play a vital role in the food chain, responsible for one in three of the mouthfuls that we eat. >>reporter: scientists working to reverse the decline may dismiss apocalyptic scenarios

but they are investigating the disappearance of hives around the world, including huge losses, from so-called colony collapse disorder, in the united states, where pollination by large commercially-managed bee businesses contributes 15 billion dollars of value to agriculture. >>research is focusing on viruses, diseases, and in the uk on a particularly destructive parasite, the varroa mite, known to britain's army of mainly amateur apiarists: >>maurer: for the first ten years we were able to treat them quite simply with little pyretheroid strips that we used to put into the hives, but the mites are now becoming immune to those strips. >>reporter: working on solutions at this unit at sussex university, researchers hope selective breeding will produce a bee which will rid itself of parasites and diseases using a natural trait calledhygienic behaviour, where bees throw a sick larva

or pupa out of the hive before it can spread the infection. >>the very latest genetic techniques are being employed, targetting not just specific colonies, but individual bees. >>carreck: by actually observing their hygienic behaviour and then looking at the genotype of thosebees, looking at their dna, we can hopefully speed up the breeding process, and that technique should be applicable elsewhere in the world. >>reporter: public interest in the honeybee issue has been growing steadily, and a national campaign bore fruit this year when the uk government pledged fifteen million dollars of new funding for research into pollinators. >>besides pests and disease, the finger of blame has been pointed at global warming, and even phone masts. and environmentalists are calling for a ban on a group of pesticides which beekeepers are also concerned about. >>lovett: pesticides have the potential to do a great deal of damage and the newer pesticides, the neonicotinoids

need to be looked at a little more closely. >>reporter: but farmers, and the uk's only professor of apiculture dismiss any link with the bees' problems. >>ratnieks: where insecticides are used correctly, they do not cause major problems; in britain forthe last five years we've not had a single reported incident of a major pesticide kill caused by insecticides on honey bees. >>reporter: it's a view echoed unsurprisingly by manufacturers such as bayer. >>little: where these products are used in large amounts, and i'll give you the example of australia, they have no problems with bee health, and in places in france where they have restricted the useof neonicotinoids they are still seeing exactly the same problems with bee health as where they arebeing used. >>reporter: and while the search goes on for a solution to the mystery of the disappearing honey bee, a commercial breakthrough will be costly and time-consuming: >>little: you first of course have to find something that you think may be active

on a particular thing, in this case a varroa mite, it then costs something in the region of about 200 million dollars to bring a new product to the market, and it'll take you somewhere between nine, ten, eleven yearsto actually do so. >>reporter: beekeepers, farmers and honey-lovers everywhere are not alone in hoping it won't be toolate to ensure the survival of a creature vital to the food we eat. >>still to come on world business. how the recession forced model makers to downsize >>and it's grouse shooting season in the uk and that means big business for landowners and rural communities. >>the glorious twelfth ... and the rest in just a moment on world business.

>>many modern buildings in cities started life as intricate models; models that take thousands of man hours to build and despite their small size can cost staggering amounts of money. but this business, much like its bigger brother construction, has had to scale down in the downturn. >>reporter: they're small. they're delicate. and they play a crucial role in the evolution of the structures that surround us. >>kologlu: you can not only see the product you are designing but at the same time you can see it, touch it and move around it and actually play with it as a physical form. >>fabian: you're almost going thru the same procedures as constructing a real building. so any flaws in design are highlighted during that process. >>davies: a physical model is... people buy in hook line and sinker. it just feels so tangible. >>reporter: the models are

used both as aids for architects and sales tools and their price tag canbe anything but tiny. >>mckeogh: anything up to, like, we've worked on 2m dollar contracts. >>reporter: models are also used as marketing tools on the miniature high seas...or as gifts for valued customers, even though a boat like this carries a 12000 dollar price tag. >>godfrey: you're looking at something like 7 weeks work, with 2 people working flat out to get it finished. every little detail is made by hand. >>reporter: they wouldn't give one of these away surely. >>godfrey: yes. they would. >>reporter: out here in this remote warehouse out in kent, planes are the big thing. >>dunn: everything is done by hand. there's no way you can actually mechanize it so it is a labour of love in many ways. or hate. >>reporter: but right now, this miniature world is suffering a giant sized downturn...as the airline industry struggles just to stay airborne, the days when carriers would buy dozens of highly detailed models to display at travel agents

are long gone. >>dunn: when i first started this business 98per cent of what we did was for the airlines. >>reporter: 98per cent? >>dunn: 98per cent if not more, now it's entirely the other way round. maybe 5per cent for the airlines, the rest of it is for collectors. >>reporter: meanwhile, an industry that relies on construction growth for its lifeblood has been particularly hard hit by the recession...a study by oxford economics estimates that construction output in developed countries has plummeted by 650 dollars per year over the last couple of years. particularly hard hit have been western european economies such as the uk's. >>ankers: this year we're expecting a fall of 16per cent from last year which is the largest fall in a single year....since records began after the war. >>reporter: in the uk, the royal institute of british architects believes that 30% of architects are lacking full time employment...and the knock on effect for mode makers has been significant. >>fabian: we've probably lost two thirds or three quarters

of our staff. >>mckeogh: there's some horror stories from other model making companies i know where they've essentially had to get rid of 90per cent of their staff. >>reporter: till recently, some companies could rely on construction in areas like the middle east to soften the model making recession, but dubai's debt problem has shown how wide ranging this financial crisis has been...and the outlook for now, is less than rosy. >>mckeogh: there seems to be no end to this recession...no one knows what's going to happen, whether there's going to be green shoots. >>ankers: the western economies have a lot of balancing of their economies to sort out and i can't see credit flowing in the way it did in the middle part of this decade for some time to come. >>reporter: but while economic conditions change, the diverse skills and qualities required to create these miniature masterpieces remain the same. >>clark: patience is the key. most definitely yes. >>dunn: this will have taken at least two, two and a half months to build from start to finish. >>reporter: it sounds

painstaking. >>dunn: it is. >>reporter: and it can be heartbreaking. this model was destroyed in transit, mistakenly left to warp on a hot airport tarmac before it even reached the client...and such examples aren't uncommon. >>fabian: there have been plenty of models that have come back after being shipped and they're justjigsaw puzzles. >>davies: and the other thing is them simply getting dropped, which is the biggest risk of all. >>clark: that is very true. very soul destroying. >>reporter: for just that reason, others opt for a more personal touch when it comes to delivery. >>godfrey: we'd put it in the car or the van and drive it to the clients door. >>reporter: how far are we talking here? >>godfrey: anything up to 1000, 1500 miles. >>reporter: now, top model makers can earn around 70000 dollars a year...so it's not a job that'll turn you into a millionaire. >>reporter: 20 or 30 of these at a few thousand pounds a pop. >>godfrey: yes, something like that. >>reporter: so that's a good contract. >>godfrey: yes it is a good contract. >>reporter: you must be a very wealthy man.

>>godfrey: chance'd be a fine thing. i wish. >>reporter: but it is a profession that seems to offer rewards well beyond the purely financial. >>clark: it is very rewarding seeing the inception of a model into the real thing. >>godfrey: it is lovely to turn up at a client and watch their faces as they're ooohing and aahhhing over all the little bits of detail. all the little cabin detail in there. >>dunn: it's basically, for want of a better word, a work of art really. i mean, it's not a rembrandt, but maybe one day, it may be. >>reporter: and in this particular industry that sense of satisfaction, is no small thing. >>this week thousands of people made the trek to the moors of scotland and northern england for the start of the grouse shooting season. we don't know how this season will shape up yet, but last year we took a trip north to find out the impact of this sport on the rural economy. >>reporter: the glorious twelfth. every year

on the twelfth of august, grouse shooting season starts on the uplands of britain. >>and as game shooting goes, this sport is considered one of the best in the world. >>masham: obviously grouse shooting is considered the ultimate sporting activity for bird shooters.so it does attract the very best, it is right up there! 13 inches >>reporter: and so it should be with punters prepared to pay anything up to ten thousand dollars for a day on this historic moorland. >>masham: grouse shooting has been going on here since the mid eighteen hundreds. my family came tomasham area, to swinton in the 1880's when they bought the swinton estate which is a 20,000 acres estate of which 9,000 acres is grouse moor. >>reporter: the economic benefits for the lord of the manor charging for visiting sportsmen to shooton his land are easily understood, but this sport has increasing importance generally for rural

communities in the uk. with farming on the decline, any boost to rural revenue is gratefully received. >>raynard: it supports the locality as well as the estate itself, hotels, supported for our bed andbreakfasts, smaller places for loaders that will be needing to stay when they come with their sporting clients... and it also filters down to the beaters who will be there on the day and a team of beaters could easily costs 1000 pounds a day to put on and then the support activity of restaurants and other catering facilities as well as the game processing industry. >>reporter: a shooting party is charged per pair, or brace, of birds they bag. and at 60 dollars a brace a good shot can spend quite impressive sums in a day. >>masham: if you get a good

day then you could get up to possibly 300 braces. so there is a lot of fluctuation, so it could be anything from 15,000 pounds, 30 or people pay even 50 thousand on a verygood day. >>reporter: that's nearly 80,000 dollars a day. there is no such thing as a typical shooting party. anyone from adventurous americans to london business men, even royalty from europe and the middle east come here. but such high level guests demand high quality shooting, which means plenty of expense for the estate. >>raynard: in terms of actual amounts a game keeper, his vehicle and his house might easily cost the owner about 30,000 pounds a year and if an area needs more keepers, like 2 or 3 and the bigger moors tend to have 3 or more keepers it becomes quite a big commitment. >>reporter: on a shooting day like this, apart from the 3 keepers, additional expenditures include 30 beaters and picker-ups, their trained dogs and 10 loaders. this could easily cost 4000 dollars a day.

>>raynard: so all in all the costs can get quite substantial in to many hundreds of thousands of pounds. the income that grouse shooting provides is essential to keep that habitat going. >>reporter: however despite its popularity any blood sport will have its critics, after all public opinion caused fox hunting with hounds to be banned in the uk a few years ago. opponents of the sport would rather people shoot alternative targets. >>tyler: clay shooting is a real option, we would encourage that. you don't have to gather in the country side with your mates and spill blood. they're other ways of enjoying the country side and i would say yes non animate, inanimate targets is a good alternative. >>reporter: supporters argue shooting is an integral part of the british landscape and in fact created the landscape itself. >>bonner: grass moors the moorland which people love which people walk across in the north of england. that is created for one thing and one thing only: that is

grouse shooting. it simply wouldn't exist without it. >>reporter: that's because unlike other game birds like pheasant that are frequently bred in captivity and released into the wild for the start of shooting season, the red grouse is completely wild. if you want to shoot grouse, you must maintain its habitat. >>masham: red grouse is a purely wild bird unlike pheasant or partridge... so what we are shootingtoday is purely what nature has provided us. so as a result we always look at what we feel is a harvestable surface and we will only shoot that in a year. >>reporter: nevertheless the managers of the moor are fully aware that given the wild nature of thebird, its availability each year cannot be predicted. >>raynard: a bad year for us could mean that if there is a disease problem in the grouse or if there is a very bad spring and the grouse chicks die because they get cold and wet... that could be devastating for us... the extremes could be that you might not be able to shoot for 2 or even 3 years. >>reporter: as a result they try and keep a steady flow of revenue with a two tier system which allows syndicates to shoot when

the high end clients are not available. these syndicates keep the moneycoming in, even if they themselves sometimes lose out on the shooting. >>raynard: by having a mixture of let teams that will come and take the premium days in august and then also a syndicate who will commit to shooting year on year if there is no shooting they will still commit some money to it. >>masham: so it s a mixture of locals, people i know. they all pay a set sum every year irrespective if we shoot or not. >>reporter: but on this shoot they shot around 200 birds most of which made it to their table that evening. >>crannage: so we are selling i would say 50% through the restaurant, the rest of it will go through yorkshire games and will go off to different restaurants around the country. >>reporter: in fact demand is so great that you can struggle to find grouse on the menu in the consumer market. >>crannage: you are home of the grouse and you go on the internet trying to search grouse, its 10 pounds a bird. so it's an expensive luxury item!

>>reporter: an expensive but enjoyable luxury item for the paying guns, but for locals a crucial revenue stream, so even if some of the syndicates have to take the odd year off, they are happy to do so knowing that that might just guarantee the grouse for the years to come. >>that's it for this week's world business. thanks for watching. we'll see you again at the same time next week. >>hello i'm raya abirached