Putin Places Japan Tobacco’s Russian Factories Under State Control

Russian President Vladimir Putin signed a decree on Thursday transferring Japan Tobacco International’s stakes in its Russian manufacturing businesses to temporary management by a state-linked company, according to the Kremlin, Reuters and Euronews.

The order hands control of four JTI businesses, Donskoy Tabak, Pereslavl-Tabak, JTI Yelets and Kres Neva, to JSC Industrial Assets (Promyshlennye Aktivy), the Russian state news agency TASS reported. The decree did not give a reason, Reuters said.

Russia’s largest cigarette maker

JTI, part of Japan Tobacco Inc., describes itself as Russia’s biggest tobacco manufacturer by sales volume, according to Reuters. Euronews reported that the company runs factories in St. Petersburg, Rostov-on-Don and the Lipetsk and Leningrad regions, employs about 4,000 people in Russia and holds roughly 40% of the country’s cigarette market. Its brands there include Winston, Camel, LD and Sobranie.

In an emailed statement cited by Reuters, JTI said it was aware of the decree and was “assessing the situation and our options, prioritizing our stakeholders, most notably our employees.”

Euronews reported that the group has invested $4.6 billion in Russia over more than 20 years and suspended new investment in production and marketing there after the 2022 invasion of Ukraine, but did not leave the country.

A growing list of foreign takeovers

Moscow placed the Russian assets of Nestle, Metro and Auchan under temporary management in September and took control of four more European companies’ assets in October, Reuters reported. Russia has described the mechanism as a response to Western sanctions and to what it calls illegal seizures of Russian property abroad.

The move comes as ties between Moscow and Tokyo worsen. Reuters noted that Russia detained a Japanese journalist on Sakhalin on suspicion of espionage last month and called a Japanese company’s drone sale to Ukraine a hostile step. Japan has joined some Western sanctions over the war, Euronews said.

Sources: Reuters via CNA, Euronews, TASS, Kremlin