Japan Tobacco International (JTI) has decided to stop producing cigarettes in South Korea as part of an effort to optimize its worldwide operations, reports The Korea Times.
Headquartered in Geneva, JTI estimates that it is cheaper to make cigarettes in its plant in the Philippines and ship them to South Korea, despite South Korea’s 40 percent import tariff.
Currently, the company leases part of KT&G’s Shintanjin plant in Daejeon to produce Mevius and other cigarette brands after importing tobacco and other raw materials.
The company reportedly also feels uneasy about continuing to share business information with KT&G, which accounts for 60 percent of the South Korean market.
South Korea increased the tariff imposed on cigarette imports in 2001 to encourage multinational firms to build plants and hire workers here.
JTI has a market share in Korea of about 8 percent.