Japan Tobacco

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Japan Tobacco Inc.
日本たばこ産業株式会社
Type Public company KK
Traded as TYO: 2914
Osaka SE: 2914
Nagoya SE: 2914
Fukuoka SE: 2914
Sapporo SE: 2914
Industry Tobacco
Founded 1898 (originally)
April 1, 1985
Minato, Tokyo, Japan
Headquarters 2-1, Toranomon, Minato, Tokyo, Japan
Key people Mitsuomi Koizumi (President and CEO)
Hiroshi Kimura (Chairman)
Pierre de Labouchere (CEO of Japan Tobacco International)
Products See below
Revenue Increase ¥2.033 trillion (2012)
Operating income Increase ¥459.18 billion (2012)
Net income Increase ¥328.55 billion (2012)
Total assets Decrease ¥3.667 trillion (2012)
Total equity Decrease ¥1.714 trillion (2012)
Employees 48,529 (2011)
Parent Government of Japan (50,01%)
Subsidiaries Gelora Djaja
RJR Tobacco Company
Website www.JT.com

Japan Tobacco Inc. (日本たばこ産業株式会社 Nihon Tabako Sangyō Kabushiki-gaisha?), abbreviated JT, is a cigarette manufacturing company. It is part of the Nikkei 225 index. In 2009 the company was listed at number 312 on the Fortune 500 list. The company is headquartered in Toranomon, Minato, Tokyo[1] and Japan Tobacco International's headquarters are in Geneva, Switzerland.[2] As of 2012 the chairman is Hiroshi Kimura and the CEO is Mitsuomi Koizumi.[3] It was founded as a public company on April 1, 1985.

History[edit]

The Japan Tobacco headquarters building in Toranomon, Minato, Tokyo

Japan Tobacco is the successor entity to a nationalized tobacco monopoly first established by the Government of Japan in 1898 to secure tax revenue collections from tobacco leaf sales. In 1904, the government's leaf monopoly was extended to a complete takeover of all tobacco business operations in the nation, including all manufactured tobacco products such as cigarettes. The ostensible reason for the expansion of control was to help fund the 1904 Russo-Japanese War, but because all foreign tobacco interests in Japan at the time were forcibly evicted under the monopolization scheme, this also protected the domestic tobacco business for nearly eighty years.[4]

The business operated within the Japanese government as an arm of the nation's Japanese Ministry of Finance until 1949 when the Japan Tobacco and Salt Public Corporation (日本専売公社 Nippon Senbai Kōsha?) was established to carry out restrictive labor relations policies under of the U.S. and allied forces' Occupation of Japan.[5] The Japan Tobacco and Salt Public Corporation remained a complete state monopoly under direct Japanese Ministry of Finance authority until 1985, when Japan Tobacco, Inc. was formed as a publicly traded stock company. With periodic incremental sales of the public's ownership beginning in October 1994, Japan Tobacco became two-thirds owned by the Japanese Ministry of Finance in June 2003,[6] and the ministry continued to own 50% until March 2013. It was announced in May 2012 that the government would sell one-sixth of the company's outstanding shares to raise ¥500 billion to finance reconstruction from the 2011 earthquake and tsunami.[7] In 2013 the Japanese government disclosed the details of its plans to reduce its equity interest in Japan Tobacco by $10 billion, devoting the proceeds to reconstruction in northeastern Japan.[8] The ministry of finance sold the stock in March 2013,[9] selling about 333 million of the 1 billion shares it owned at that time. The government remains required by law to own at least one-third of JT's stock.[10]

JT International (JTI), acquired in 1999 from R.J. Reynolds, is an operating division of Japan Tobacco Inc., handling the international production, marketing and sales of the group's cigarette brands. It sells Camel, Salem, and Winston brands outside the USA.

Japan Tobacco also operates in foods, pharmaceuticals, agribusiness, engineering, and real estate. Japan Tobacco completed the largest ever foreign takeover in Japanese history through acquisition of Gallaher Group plc in April 2007.[11] Japan Tobacco runs the Tobacco and Salt Museum in Shibuya, Tokyo.[12]

Japan Tobacco controls 66.4% of the cigarette market in Japan and will seek more takeovers from 2009 to build on the 1.4 trillion JPY (USD 15 billion) purchase of Gallaher Group, with then-President Hiroshi Kimura commenting that further acquisitions would be appropriate after the full integration of Gallaher by 2009.[13][14] In 2006/2007 Japan Tobacco planned to start Serbia production, and also planned to invest another $100 million. JT paid "$35 million euros" [sic] for 98.5 percent of Senta Tobacco Industry in May 2006, with a further $10 million invested since then. The plant has a production capacity of some five billion cigarettes a year.[15]

In April 2012 it was announced that Mitsuomi Koizumi would become President, and president Hiroshi Kimura would become Chairman of JT. and Chairman Yoji Wakui would retire. Wakui had previously been a bureaucrat at the ministry of finance. Koizumi assuming the presidency meant that for the first time since the 1985 privatization neither president nor chairman was from the ministry of finance.[16] Koizumi, who had been Executive Deputy President, became president in June 2012.[17]

As of 2013, although tobacco consumption was declining, the Japanese remained heavy smokers, consuming an average of 1,800 cigarettes a year, compared to about 1,000 per capita in the United States.[8]

On October 30, 2013 JT announced that it would close four Japanese factories and cut 1,600 jobs in Japan through voluntary retirements. This was planned to be completed by March 2016. JT also planned to consolidate 25 branch offices into 15 regional headquarters, and close leaf-processing and vending machine operations.[18]

Lawsuits[edit]

There have been a number of Japanese cases related to smoking, either directly or indirectly related to JT.

1980-1987 JNR Shinkansen lawsuit[edit]

A group of nonsmokers sued at the Tokyo District Court demanding that Japanese National Railways shinkansen (bullet trains) provide more non-smoking cars. The case was filed in 1980 and while the court recognized tobacco's health risks[19] the March 27, 1987 ruling rejected the lawsuit on the basis that the plaintiffs had failed to prove their harm to be “beyond the limits of toleration”.[20]

1998-2005 Tokyo lawsuit[edit]

In 1998 seven plaintiffs represented by lawyer Yoshio Isayama sued JT at the Tokyo District Court for ¥70 million compensation (¥10 million per plaintiff) for health damage caused by smoking JT cigarettes. While similar cases had been filed in Nagoya, this was the first such case in Tokyo. In addition to financial compensation, the plaintiffs also demanded:

  • That tobacco sales through vending machines be banned;
  • that advertising on television and radio be stopped;
  • That promotions at public and sports events be halted;
  • That a more stringent warning label be printed on cigarette boxes.[21]

The plaintiffs' case was dismissed by the district court on October 21, 2003. The court agreed with the 1980s ruling that tobacco had health risks, but said that there was no causal link between the smoking habits and the specific diseases of plaintiffs. In addition, Judge Kikuo Asaka denied that nicotine was highly addictive. Isayama said that the group would appeal the decision to the Tokyo High Court.[22]

On June 22, 2005 the Tokyo High Court dismissed the case, by that time brought by only six plaintiffs. Three of the plaintiffs had died during the course of the case. Judge Toshinobu Akiyama said he agreed with the District Court decision. Jun Araki, the son of one of the deceased plaintiffs, said: "This ruling placed priority on the annual 2.3 trillion yen in [tobacco] tax revenue over the precious lives and health of the Japanese people". He also said the plaintiffs would appeal to the Supreme Court.[23]

2005-2010 Yokohama lawsuit[edit]

In January 2005 plaintiffs Kenichi Morishita, Koreyoshi Takahashi, and Masanobu Mizuno filed a case in the Yokohama District Court against JT seeking ¥30 million in damages for smoking related illness. Morishita died of pneumonia while the case was being fought, and JT used the same argument as in the 1998-2005 Tokyo case, that smokers were free to quit anytime and that cancer and other illnesses had multiple causes.[24]

On January 20, 2010 the court clearly ruled that there was a link between smoking and lung cancer and respiratory illnesses, and said that smoking may be addictive. However, the court rejected the demand for damages, and said that the plaintiffs had smoked of their own free will and that there was no proof that smoking had directly caused their sicknesses.[25]

Brands[edit]

JT flagship brands[edit]

Other brands[edit]

Smoking etiquette posters[edit]

JTI Cigarettes are lethal.jpg

JTI runs a series of posters designed to educate smokers about smoking etiquette. They can be seen widely around Japan, especially located near train stations. Poster gallery

Environmental record[edit]

Japan Tobacco had recent health issues involving their company. Contaminated gyoza dumplings made by a Chinese company's factory in China, which sold its products to JT, poisoned ten people, including a five year old girl. Thousands of other Japanese people were going to the hospital because of stomach issues as well. A number of dumplings were found containing dichlorvos and methamidophos from pesticide.[26] The health minister of Japan said the contamination at the Chinese factory was possibly intentional, and the police are investigating for an attempted homicide.[26] The dumplings were from China, but Japan Tobacco has said it does not plan to cease its manufacturing in China. Frozen food sales went down by 60% for the business since this health scare.[27] Japan Tobacco's stock price fell 7.1% after they were forced to recall their products, and the company also lost a $500 million merger deal with Nissin Foods because of this incident.[28]

Anti-Illicit Trade Compliance[edit]

Japan Tobacco Inc, through its international operating divisions JT International S.A. and JT International Holding BV, signed a Cooperation Agreement with the European Commission in 2007 to combat the illicit trade in cigarettes under Article 9 of which the company agreed to “pro-actively disclose” to the European Commission’s Anti-Fraud Office (Office Europeen de Lutte Antifraude – OLAF) “…all material information coming into (its) possession after the Execution Date relating to potentially Illegal Product.”[29] The Agreement defines “Illegal Product” as Contraband or Counterfeit Cigarettes. Both Japan Tobacco Inc and JT International S.A. claim to adhere to a “zero-tolerance approach” to illicit trade.[30][31]

JT International S.A. and several of its distributors, including Megapolis in Russia and IBCS Trading in Cyprus, however, have been implicated as recently as 2011 in widespread smuggling to include selling cigarettes to a buyer in Syria subject to EU, Swiss, and US Sanctions and diverting cigarettes from Russia into the European Union and smuggling Winston and other popular cigarette brands into Iran.[32][33][34][35][36] A JT International S.A. executive told the Wall Street Journal in August 2012 that the firm had continued to ship cigarettes to Syria until as recently as February 2012, almost a full year after the imposition of EU and US sanctions. The Journal cited Syrian dissident sources who claimed that the government of Syrian President Bashar al-Assad uses cigarettes as payment for the irregular military forces and militias, known as the shabeeha, who have had a central role in its violent crackdown.[37]

Company documents show that in 2010 the head of the JT International SA security office – who performed a similar function at the former Gallaher Group PLC – sought to destroy evidence linking up to 13 company officers to smugglers in the Balkans region; a parallel effort was then being run by company management to hack into the emails of company anti-smuggling investigators, competitors, and law enforcement.[38][39]

The firm also announced in 2011 that it had purchased the largest cigarette producer in Sudan and South Sudan as part of an effort to expand sales in the war-torn region, which has emerged as an entrepot for cigarette smuggling.[40][41]

Sponsorships[edit]

See also[edit]

References[edit]

  1. ^ "Corporate Data (as of June 22 2012)." Japan Tobacco. Retrieved September 27, 2012.
  2. ^ Japan Tobacco International JTI Information for Journalists Retrieved on September 27, 2012
  3. ^ Japan Tobacco Members of the Board, Auditors, and Executive Officers June 22, 2012 Retrieved on September 27, 2012
  4. ^ Levin, Mark, Smoke Around the Rising Sun: An American Look at Tobacco Regulation in Japan. Stanford Law and Policy Review, Vol. 8, p. 99, 1997. Available at SSRN: http://ssrn.com/abstract=1691348
  5. ^ Id.
  6. ^ Levin, Mark, Tobacco Industrial Policy and Tobacco Control Policy in Japan (日本におけるたばこ産業政策とたばこ規制政策). Tobacco Free Japan: Recommendations for Tobacco Control Policy, pp. 298-313, November 2004; Asian-Pacific Law & Policy, Vol. 6, No. 1, 2005. Page 301, Table A.1: Privatization of Japan's Tobacco Monopoly, 1985 to present. Available at SSRN: http://ssrn.com/abstract=1691804
  7. ^ The Japan Times Ministry to sell chunk of JT shares May 20, 2012 Retrieved on August 22, 2012
  8. ^ a b Hiroko Tabuchi (February 25, 2013). "Japan Plans to Sell $10 Billion Stake in Cigarette Firm" (Dealbook blog). The New York Times. Retrieved February 26, 2013. 
  9. ^ JT website Notice concerning decision on offer price March 11, 2013
  10. ^ Financial Times Japan to raise up to $10bn from tobacco share sale February 25, 2013
  11. ^ "Gallaher agrees £7.5bn Japan Tobacco takeover – Scotsman.com News". The Scotsman (Edinburgh). 15 December 2006. 
  12. ^ Tobacco & Salt Museum Home Retrieved on September 27, 2012
  13. ^ JT holds approximately two-thirds of the domestic cigarette market share, which is built on its best-selling brands: Mild Seven, Cabin, Caster, Seven Stars, Peace, Camel, and Salem." Japan Tobacco website, 2006
  14. ^ Hoover's business report, 2006, on Japan Tobacco Inc. "Japan Tobacco has plenty to puff about. The company controls more than 70% of the cigarette market in a country where about half of the male population smokes."
  15. ^ "Japan Tobacco starts Serbia production, eyes more". Reuters. 24 April 2007. 
  16. ^ The Japan Times Japan Tobacco names Koizumi as next president April 24,2012 Retrieved on August 22, 2012
  17. ^ Reuters Koizumi, Mitsuomi BRIEF BIOGRAPHY Retrieved on August 22, 2012
  18. ^ Reuters Japan Tobacco to shut plants, cut jobs as domestic demand falls October 30, 2013
  19. ^ Matsubara, Hiroshi Former smokers denied in health compensation claim October 22, 2003 Retrieved on September 27, 2012
  20. ^ Levin, Mark A [papers.ssrn.com/sol3/papers.cfm?abstract_id=1691348 "Smoke Around the Rising Sun: An American Look at Tobacco Regulation in Japan" Stanford Law and Policy Review, Vol. 8, p. 99, 1997] Retrieved on September 27, 2012
  21. ^ The Japan Times Japan Tobacco is taken to court May 15, 1998 Retrieved on September 27, 2012
  22. ^ Matsubara, Hiroshi Former smokers denied in health compensation claim "The Japan Times" October 22, 2003 Retrieved on September 27, 2012
  23. ^ Ito, Masami Death, disease not linked to smoking: high court June 23, 2005 The Japan Times Retrieved on September 27, 2012
  24. ^ Kageyama, Yuri Japan's smoking habit runs into court challenge "The Japan Times" August 7, 2009 Retrieved on September 27, 2012
  25. ^ The Japan Times Suit fails but tobacco risks noted January 27, 2010 Retrieved September 27, 2012
  26. ^ a b Dumpling scare thwarts Japan Tobacco's merger plan – International Herald Tribune
  27. ^ Japan Tobacco to Stay in China Despite Dumpling Scare – Food Industry News
  28. ^ "After Bad Dumplings, Nissin Loses Appetite For Japan Tobacco Deal". [dead link]
  29. ^ "EC-JTI Cooperation Agreement 2007". 
  30. ^ "JTI Zero Tolerance Policy". 
  31. ^ "JT Anti-Contraband Policy". 
  32. ^ "UK Guardian on JTI Smuggling to Syria". http://www.guardian.co.uk/business/2012/jan/29/syria-cigarettes-jti-assad. 
  33. ^ "OCCRP Report on JTI Smuggling". 
  34. ^ "Reuters Article on JTI Smuggling". 4 November 2011. 
  35. ^ "IBCS Trading Bill of Lading Shipment to Syria". 
  36. ^ "JTI Internal BI Investigation Report on Smuggling". 
  37. ^ "WSJ Article EU Probes Cigarette Deal That May Have Aided Syria, 21 August 2012". 
  38. ^ "JTI Documents on Destroying of Evidence of Smuggling". 
  39. ^ "JTI Email Alleging Hacking of Emails". 
  40. ^ "JTI Announces Purchase of Sudan's Hagger Cigarette". 
  41. ^ "Research Report on Trade in East Africa "Blood" Cigarettes". 

External links[edit]