Russian President Vladimir Putin signed a decree on November 5 placing the Russian operations of Japan Tobacco International under state control, transferring stakes in four local manufacturing facilities to a domestic entity named Industrial Assets, according to Business Standard. The move prompted a sharp 19.3 per cent plunge in Japan Tobacco shares on Friday and triggered an immediate diplomatic protest from Tokyo.
The presidential decree targets four corporate entities handling JTI’s business in Russia: Petro, JTI Donskoy Tabak, JTI Yelets, and Kres Neva. These include cigarette factories in St. Petersburg and Rostov-on-Don, alongside tobacco-processing facilities. Under the arrangement, management control shifts to the state-appointed administrator while legal ownership technically remains with the parent group, a mechanism Moscow previously applied to assets belonging to companies from countries it designates as unfriendly.
JTI has operated in Russia since 1999 and employs 4,000 people in the country. Holding roughly 40 per cent of the combustible tobacco market, the business accounts for about 10 per cent of JT Group’s revenue and roughly 25 per cent of its operating profit, generating $2.5 billion in revenue in 2025. Following the full-scale invasion of Ukraine in 2022, the company suspended new investments and marketing activities in Russia while continuing production and sales.
As of October 2025, Japanese companies maintained 321 business locations in the country, according to Japan’s Foreign Ministry. While manufacturing, wholesale, and retail were the dominant industries five years prior, operations have scaled down significantly since the onset of the conflict in Ukraine. A survey conducted by the Japan External Trade Organization in September 2025 indicated that around three-quarters of 50 surveyed companies planned to maintain the status quo over the following one to two years, with only 6 per cent reporting intentions to scale back, relocate, or withdraw.
The takeover makes JTI the first major international tobacco manufacturer to have its Russian assets placed under temporary management by Moscow. According to financial disclosures, JT held an average 35.8 per cent share of Russia’s total tobacco market by volume during the first nine months of 2026, with sales reaching 59.9 billion units. Analysts note that JT Group holds an estimated ¥100 billion to ¥200 billion ($634 million) in local cash and deposits in Russia that now risk becoming trapped in the country.
Tokyo Protests Seizure as Shares Plunge
The Japanese government holds around 37 per cent of shares in Japan Tobacco Inc., specifically reported as a 37.55 per cent stake by finance officials. Following the Kremlin’s decree, the stock tumbled 19.3 per cent in Tokyo trading on Friday, falling from Thursday’s record closing high of ¥7,769 to a bid and ask price of ¥6,269 at 11:30 a.m. Tokyo time, with no shares changing hands initially due to a heavy glut of sell orders.
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Japanese Finance Minister Satsuki Katayama addressed reporters at a press conference after a Cabinet meeting on November 6, confirming that Tokyo had taken immediate diplomatic action.
As the Japanese government, we have been asking the Russian side to ensure that the legitimate interests of Japanese citizens and companies are not harmed. Regarding this measure, we have already protested to the Russian government through diplomatic channels and other means and have urgently requested the withdrawal of the measure and other action
Satsuki Katayama, Japanese Finance Minister
The senior officials currently visiting Russia, together with our ambassador, have protested to the Russian government and demanded that the measure be withdrawn immediately
Minoru Kihara, Chief Cabinet Secretary
Economy, Trade and Industry Minister Ryosei Akazawa noted that Japanese authorities had been monitoring growing risks as Western firms faced similar interventions in recent months. There have been a series of cases in which Russian authorities have placed the assets of Western companies under temporary control,
Akazawa said on Friday. In that sense, to be honest, we have been on our guard.
Escalating Tensions Between Tokyo and Moscow
The takeover arrives amid an accelerating diplomatic and political rift between Japan and Russia. Tensions intensified in August after Vladimir Putin visited a disputed island close to Japan, and again in October when Russia’s Federal Security Service detained Hokkaido Shimbun journalist Yuki Imai on espionage allegations.
A spokesperson for the Japan External Trade Organization pointed out that the latest development highlighted the inherent risks of holding assets in the country, noting a separate incident in February 2024 when a factory operated by a Japanese company was similarly placed under Russian management.
【JT's Russian business, about 10% of its sales, placed under state control】 From Japan, I read this news as the price of a delayed exit. On November 5, President Putin signed a decree placing the Russian business of Japan Tobacco (JT) under temporary administration. The…
Moscow has also cited Japanese non-lethal military support, including Japan signing up to PURL, and drone sales to Ukraine by a Japanese company as hostile steps. In an emailed statement, JTI said that it was reviewing its position in response to the decree.
Our group has continued its business operations in Russia while complying with all domestic and international sanctions and regulations
JTI, corporate statement
JTI added that it was assessing the situation and our options, prioritising our stakeholders, most notably our employees
.
More on Russia
Russian President Vladimir Putin signed a decree on Thursday placing assets owned by an overseas subsidiary of Japan Tobacco under the temporary management of a Russian company. https://t.co/4YAAf1ND4S
Putin has de facto nationalized the Russian assets of Japan Tobacco International (JTI), transferring control of four subsidiaries to a Russian company called Industrial Assets. The move affects tobacco operations in Rostov-on-Don, Yelets and St Petersburg. JTI's Japanese parent… pic.twitter.com/demnDrkdbn
