Putin places Japan Tobacco's Russia assets under local management

Russian President Vladimir Putin on Thursday instructed Japan Tobacco Inc.'s Russian holdings to be placed under temporary Russian management, as part of Moscow's ongoing retaliation against a Western country imposing sanctions following the conflict in Ukraine. The decree pertains to JT International, a Japanese conglomerate that oversees the company's global operations.

Russia constitutes roughly 10 percent of Japan Tobacco's total sales. The Kremlin did not specify the rationale behind the presidential order, but it previously justified similar actions against European firms by stating they were affiliated with countries unfriendly to Russia. Meanwhile, Japan Tobacco continued its operations in Russia, while other Japanese entities had exited the market as a result of the Russian-backed war in Ukraine, which began with a full-scale invasion in 2022.

On Friday, Japan's Finance Minister Satsuki Katayama announced that Tokyo had appealed to Moscow to reverse the decision. Japan has consistently called upon Russia to safeguard the lawful rights of Japanese individuals and businesses, she added, affirming that the government would persistently monitor the situation and respond appropriately in collaboration with pertinent ministries and Japan Tobacco.

Additionally, Kimitake Nakamura, director general of the Foreign Ministry's European Affairs Bureau, lodged a protest with Russian Ambassador to Japan, Nikolay Nozdrev, over the decree's issuance and urged for its withdrawal, according to ministry officials. Russia has intensified its pressure on Japan in recent months, including Putin's inaugural trip to a Japanese-held, Russian-claimed island in August.

A Japanese journalist was apprehended in the Russian Far East last month on espionage allegations. Japan Tobacco operates four manufacturing facilities in Russia, located in the Leningrad and Lipetsk regions, with a workforce of approximately 4,000 employees. The company began its Russian operations in 1999 and emerged as the leading tobacco brand in the market by 2007.

According to Tass news agency, the authority to transfer the assets of four entities—the Donskoy Tabak, Pereslavl-Tabak, JTI Yelets, and Kres Neva—was granted to JSC Industrial Assets. In 2023, the Russian government facilitated the temporary management of companies' Russia assets belonging to unfriendly nations.