The British bough china, tea and silk, among other products in China. These were highly sought after by the upper classes (and in some cases, the expanding upper middle classes) in Europe.

However, the Chinese were not interested in any products the Europeans could produce themselves. The British had learned from the triangular trade, where they brought weapons and glassware to Africa, sold them and bought slaves to transport to America to sell and to buy American products (cotton, tobacco, sugar, rum) to sell in Europe.

Since there were very little goods the British could sell to the Chinese, they had to pay in silver coins. Some historians state that the American silver was mined by the Spanish, spread by their mercenaries over Europe, brought to Britain in exchange for sugar and tobacco and ended up in China to pay for Chinese goods.

Wanting to increase profit by shipping both ways, the British looked for a good that would be bought by the Chinese and they found it in opium. The more they shipped, the more the Chinese wanted. The British started large-scale cultivation of opium in India and sold the produce in China.

The Chinese, alarmed at the spreading problems of opium addiction, ordered their customs officials to close the trade down. Economy might also have figured in that decision. The Chinese seized 20 000 chests of opium and the Britis, using this as a pretext, escalated the conflict, demanding compensation. Fighting soon broke out, and with the British victorious, they were allowed control of Hong Kong and continued sale of opium.

As for the opium produced, it was sold by the colonial authorities in India to merchants on the condition that it could only be shipped and sold to China, so it was not supposed to end up in Britain itself.

In the most basic sense, the British Opium trade was a workaround to avoid dealing on the trade rules set forth by the Qing. Trade with China involved very centralized oversight and limited access to ports, as well as pretty much strictly involving silver from European nations (Spanish silver from the Americas played a big part in Chinese economic growth, and vis versa as Spanish silver trade dropped). The British, at the time of the Qing, were heavily involved in India and were also undergoing major economic reforms as the industrial revolution went on, with British textile manufacturing being a big factor in British trade and industrialization. In an effort to make it more difficult for Indian cotton and textiles to compete against British textiles, the cotton fields in Northern India were removed and replaced by a crop they found grew quite well in its stead: opium.

China was well aware of the problems with opium, and had had a long standing ban on the substance, and this applied to the Qing dynasty as well. Britain was no less aware of the harms of opium, and it was never intended to nor did it ever make it back to Britain. Opium was kind of a silver substitute for the British merchant companies operating in China, who would first sneak opium through the ports to trade under the Imperial government's radar, receiving silver for the opium, and then would promptly turn back and trade this silver for Chinese goods. This was not unknown to the Imperial government, but it was a difficult problem to quantify or deal with. Between 1816 and 1830, opium trade was a massive problem, draining imperial coffers of silver as well as China of goods, and leaving much of the population with a terrible drug problem. Finally, an official named Lin Zishu convinced the imperial court of the problem, and set about destroying warehouse upon warehouse of illegal opium in China. The merchant companies who illegally owned said opium demanded compensation by the Crown, and as complaints grew, thus the first Opium War was started.