JT Not Adjusting Russian Business

In a statement issued to This Week in Asia, a Japan Tobacco (JT) official said: “As announced in early 2022, the JT Group has suspended all new investments and marketing activities in Russia. At present, the group continues its manufacturing and sales operations in the country in full compliance with all applicable regulations, including but not limited to economic sanctions and export controls. We continue to closely monitor legislative developments as well as the situation on the ground and review our options.”

JT announcing that it was not pulling out of the lucrative Russian market makes news as the Ukrainian government continues its efforts to get some of the world’s largest companies to exit its combative neighbor. A Ukrainian report said JT contributed $182.3 million in taxes to the Russian government in 2023, fourth among taxpaying companies behind only Austria’s Raiffeisen Bank International ($491 million), China’s Chery Automobile, and Philip Morris, the world’s leading tobacco company.

International companies that did not exit the Russian market immediately after the invasion of Ukraine began but later pulled out from bad press include Heineken, Citigroup, and Kraft-Heinz.

JT, which is still one-third owned by the government, faces minimal criticism in Japanese media and as a result, the public – which is strongly supportive of Ukraine – is offering few objections.

“There has been no comment from the government, no pushback from the public, and nothing in the media,” said James Brown, a professor of international relations at the Tokyo campus of Temple University who specializes in Russian affairs. “So the sense at [JT] headquarters appears to be ‘why should we walk away from it?’

“The position in Japan was that if being there was not explicitly sanctioned, then it was fine to carry on. And that meant it was not a problem for the company, which was open about what it was doing.”

In May 2024, Japan Tobacco CEO Masamichi Terabatake made that stance clear when he told the Financial Times that the company’s supply chains had been adjusted to meet international sanctions and that it would remain active in Russia to protect investors’ interests.

“If worse comes to worst, there is even the risk of a shareholder lawsuit if we were to discontinue a business that we are able to continue,” he said.