CEO Japan Tobacco Adapts Supply Chains to Sustain Russian Operations

02 May, 2024

CEO Japan Tobacco Adapts Supply Chains to Sustain Russian Operations

The cigarette maker Japan Tobacco has navigated Western sanctions against Moscow to sustain its presence in the lucrative Russian market, CEO Masamichi Terabatake disclosed to the Financial Times.

Adjustments in supply chains, including rerouting through Turkey and relocating personnel to Hong Kong, were undertaken over a year. Despite initial considerations of divestment post-Ukraine conflict, Japan Tobacco opted to retain its Russian operations, encompassing four factories and over 4,000 employees.

Investor concerns about reputational risks have dwindled, with Russia contributing one-fifth of the company's global profits, amounting to $3 billion in 2023. While Japan has aligned with Western sanctions, its participation in Russian energy projects persists due to reliance on Russian liquefied natural gas. Notably, amid a wave of withdrawals, over 1,300 Western firms persist in Russian dealings, underscoring the complexity of disengagement amid geopolitical tensions.