Japan Tobacco to Break Free of Government

by Jenny Novac on April 27, 2012

Japan Tobacco Inc, the world’s third-largest tobacco company by sales volume, will for the first time install top management that aren’t former bureaucrats, the WSJ reports. The company, half-owned by the Japanese government, is hoping to become a more efficient company in order to compete with competitors including British American Tobacco PLC and Philip Morris International Inc. The government is also planning to cut its holding in the company, in part to raise funds for post-quake reconstruction.

 

Japan Tobacco

Japan Tobacco International

Since 1985, at least one of the posts of president and chief executive has been held by a former finance ministry official.

Becoming a fully private company would allow the company to have more management freedom for strategic decisions, including overseas acquisitions, particularly as Japan’s smoking population decreases.

Japan Tobacco already makes more than half of its revenue from overseas. It would also shield the company from pressure from Japan’s tobacco farming lobby. In a recent interview with the WSJ, senior vice president Yasuyuki Tanaka said Japan Tobacco’s management freedom “won’t be secured without full privatization.”

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