Putin Transfers Japan Tobacco Operations to Russian State Control

Russia has taken control of Japan Tobacco International's (JTI) domestic operations, transferring the cigarette manufacturer's assets to a state-linked holding company through a presidential decree signed by Vladimir Putin on Thursday. The move covers four factories, approximately 4,000 employees and a business accounting for roughly 40% of Russia's cigarette market. The decree places the operations under AO Promyshlennye aktivy, giving the state-linked entity control over JTI's Russian business.

The affected facilities are located in St Petersburg, Rostov-on-Don, the Lipetsk region and the Leningrad region. JTI is Russia's largest cigarette manufacturer, according to the company's market position described in the Euronews report. Its domestic portfolio includes Winston, Glamour, Camel, LD and Sobranie, alongside Russian brands Pyotr I, Russky Stil and Donskoi Tabak.

The company, headquartered in Geneva, entered the Russian market in 1999. It expanded its local presence in 2018 by acquiring domestic tobacco producer Donskoi Tabak.

According to a company profile updated in November 2025, JT Group invested $4.6 billion in its Russian operations over more than two decades. Following Russia's full-scale invasion of Ukraine in 2022, JTI remained in the country but suspended new investment in production and marketing. The transfer adds JTI to a growing list of foreign businesses whose Russian assets have come under state management. Previous cases include Swiss food producer Nestlé, French retailers Auchan and Leroy Merlin, and German retailer Metro.

Russian authorities have defended external management as a response to Western sanctions imposed after the 2022 invasion of Ukraine. Companies from countries designated as "unfriendly" face restrictions that include limits on dividend payments, preventing profits from being freely transferred abroad. Foreign companies seeking to sell Russian business assets also face substantial fees under the restrictions. These measures have increased the financial and administrative barriers facing international businesses operating in Russia.

Putin addressed the mechanism on October 1, saying it also allowed Russia to prepare retaliatory measures if Russian assets abroad were nationalized. He left open the possibility of restoring control to former owners if "conditions improved". Under the external management arrangement, state-linked administrators take charge of Russian business assets without the foreign owner's consent or compensation.

The foreign company may retain nominal ownership, but effective operational control passes to the Russian state. The seizure also comes amid deteriorating relations between Moscow and Tokyo. Last month, Russian authorities arrested Yuki Imai, a journalist working for Japan's Hokkaido Shimbun newspaper, on espionage charges.

Russia's Foreign Ministry accused Japan of systematically using journalists to collect intelligence inside the country. Japan rejected the allegation.

The two countries also have a longstanding territorial dispute over the Chishima Islands in the Pacific Ocean. Japan has additionally joined several Western sanctions against Russia following the invasion of Ukraine.