President Putin announced an executive order transferring four JT entities in Russia to temporary state administration. The order is said to cover the Russian operations of JT’s overseas subsidiary JTI, with temporary administration to be transferred to Russian companies designated by the state.
The Russian government announced on the 5th an executive order covering JT’s local assets, as part of a policy of temporarily placing the businesses of Western companies operating in Russia under state control. The policy is said to provide for the temporary transfer of four entities owned by JT’s overseas subsidiary JTI in Russia to Russian companies designated by the state.
The move forms part of a framework for “de facto confiscation” established under an executive order issued in 2023. It has been described as the operation of a system under which the state places the businesses of Western companies remaining in Russia under its control as a countermeasure against unfriendly actions by foreign countries. In September, Nestlé and a German-owned supermarket chain were among those designated.
This is believed to be the first case in which a Japanese company has been covered by the system, drawing attention to the position of Japanese companies. JT continued its tobacco business in Russia even after the 2022 invasion of Ukraine, and its share of Russia’s cigarette market has reached approximately 40%. JTI’s Moscow office told ANN that it was unable to comment immediately.
Following the announcement, attention is focused on the scope of future applications and how the system will operate in practice. The Russian government’s series of measures could entail changes to the framework for managing foreign companies’ Russian businesses.