Russian President Vladimir Putin has placed Japan Tobacco International's (JTI) Russian operations under state control, ordering the transfer of its four factories and around 4,000 employees to a state-linked holding company, AO Promyshlennye aktivy.
The decree covers JTI's factories in St Petersburg, Rostov-on-Don, the Lipetsk region and the Leningrad region. The company holds roughly 40% of the Russian cigarette market, making it the country's largest manufacturer. Its product range includes international brands Winston, Glamour, Camel, LD and Sobranie, and domestic labels Pyotr I, Russky Stil and Donskoi Tabak.
JTI, whose headquarters are in Geneva, entered the Russian market in 1999 and acquired local producer Donskoi Tabak in 2018. According to a company profile updated in November 2025, the company had invested $4.6bn in its Russian operations over more than 20 years. After Russia's full-scale invasion of Ukraine in 2022, JTI did not leave the country but suspended new investment in Russian production and marketing.
The seizure adds JTI to a list of European companies whose Russian assets have been transferred to state management under the same mechanism, including Swiss food group Nestlé, French retailers Auchan and Leroy Merlin, and German retailer Metro. Moscow has presented the external management process as a response to sanctions imposed after the 2022 invasion. Restrictions introduced for companies from states deemed "unfriendly" include caps on dividend payments, which trap profits inside Russia, and substantial fees on sales of Russian business assets.
Putin said on 1 October the mechanism also gave Russia the ability to prepare retaliatory measures against any possible future nationalisation of Russian assets abroad, while leaving open the possibility of returning control to former owners if conditions improved. External management involves appointing state-linked administrators to run a company's Russian assets without the foreign owner's consent or compensation, transferring effective control to the Russian state regardless of who retains nominal ownership.
The seizure follows Russia's arrest last month of Yuki Imai, a journalist with the Japanese newspaper Hokkaido Shimbun, on espionage charges. The Russian Foreign Ministry has accused Tokyo of systematically using journalists to gather intelligence inside the country. Japan has rejected the accusation. Japan, which has a long-standing dispute with Russia over the Chishima Islands in the Pacific Ocean, has also joined some Western sanctions over the ongoing war in Ukraine.
Analysis
Why This Matters
- The seizure undermines the security of foreign investment in Russia, particularly for companies from countries deemed unfriendly.
- It continues a pattern of asset seizures that could escalate tensions between Russia and Japan, already strained over territorial disputes and Ukraine sanctions.
- The transfer of JTI's dominant market share to a state-linked firm concentrates economic control in the Russian state, affecting competition and consumer choice.
Background
Since Russia's full-scale invasion of Ukraine in 2022, Moscow has introduced external management as a response to Western sanctions. This mechanism allows the state to appoint administrators to run assets of companies from countries it considers unfriendly, without consent or compensation. JTI is one of several major European firms, including Nestlé and Auchan, to have its operations seized under this process.
Key Perspectives
Russian government: presents the external management as a response to sanctions and a safeguard against possible nationalisation of Russian assets abroad. Putin has stated the mechanism allows for retaliatory measures while leaving open the possibility of returning control if conditions improve.
Japanese government: has rejected Russian accusations of using journalists for espionage. Japan maintains a territorial dispute with Russia over the Chishima Islands and has joined some Western sanctions on Russia over the war in Ukraine.
What to Watch
- Whether other foreign companies operating in Russia face similar seizures, particularly from Japan or other countries that have imposed sanctions.
- Japan's diplomatic and economic response, including the possibility of further sanctions or retaliatory measures.
- Any indication from Moscow that the external management might be reversed, as Putin suggested was possible.
Checked
12 claims in this story checked against 1 source: 11 supported.
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- SupportedPutin seized JTI’s Russian operations.Euronews: “Russian President Vladimir Putin placed Japan Tobacco International's (JTI) operations under state control on Thursday, ordering their transfer by decree to a state-linked holding company AO Promyshlennye aktivy.”
- SupportedThe decree transfers JTI’s four factories to a state-linked holding company.Euronews: “The decree transferred JTI’s four factories, around 4,000 employees and roughly 40% of the Russian cigarette market to a state-linked holding company.”
- Partly supportedThe decree transfers 40% of the Russian cigarette market to the holding company.Euronews: “The decree transferred JTI’s four factories, around 4,000 employees and roughly 40% of the Russian cigarette market to a state-linked holding company.”
- SupportedAround 4,000 employees are being transferred to the holding company.Euronews: “The decree transferred JTI’s four factories, around 4,000 employees and roughly 40% of the Russian cigarette market to a state-linked holding company.”
- SupportedThe decree covers factories in St Petersburg, Rostov-on-Don, the Lipetsk region and the Leningrad region.Euronews: “The order covers JTI's factories in St Petersburg, Rostov-on-Don, the Lipetsk region and the Leningrad region.”
- SupportedJTI holds roughly 40% of the Russian cigarette market and is the country’s largest manufacturer.Euronews: “The company employs around 4,000 people in Russia and holds roughly 40% of the Russian cigarette market, making it the country's largest manufacturer.”
- SupportedJT Group had invested $4.6bn in its Russian operations over more than 20 years, according to a company profile updated in November 2025.Euronews: “JT Group has invested $4.6bn in its Russian operations over more than 20 years, according to a company profile updated in November 2025.”
- SupportedAfter Russia’s 2022 full-scale invasion of Ukraine, JTI stayed in Russia but suspended new investment in Russian production and marketing.Euronews: “After Russia's full-scale invasion of Ukraine in 2022, the company did not leave the country but suspended new investment in Russian production and marketing.”
- SupportedRussia arrested Yuki Imai, a Hokkaido Shimbun journalist, on espionage charges last month.Euronews: “The seizure follows Russia's arrest last month of Yuki Imai, a journalist with the Japanese newspaper Hokkaido Shimbun, on espionage charges.”
- SupportedThe Russian Foreign Ministry accused Tokyo of systematically using journalists to gather intelligence inside Russia.Euronews: “The Russian Foreign Ministry has accused Tokyo of systematically using journalists to gather intelligence inside the country.”
- SupportedJapan rejected the accusation.Euronews: “Japan has rejected the accusation.”
- SupportedPutin said on 1 October that the mechanism could prepare retaliatory measures against possible future nationalisation of Russian assets abroad, while control could be returned to former owners if conditions improved.Euronews: “Putin said on 1 October the mechanism also gave Russia the ability to prepare retaliatory measures against any possible future nationalisation of Russian assets abroad, while leaving open the possibility of returning control to former owners if "conditions improved".”