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Bucharest
December 9, 2022
BUSINESS

“Winning in Romania is like playing on a global stage”

Interview with Mutsuo Iwai, Executive Vice President and deputy CEO, also a member of the JT Board.

Mutsuo Iwai was born in Osaka on October, 29, 1960 and, with a Bachelor’s Degree in Economics from University of Tokyo, joined Japan Tobacco in 1983. He held a number of positions in JT, before being appointed Vice President of the Corporate Planning Division in Tokyo in 2003. From here, he moved into Corporate Strategy before eventually joining the Food Business as Senior Vice President in 2005. In 2006 he was appointed Executive Vice President. Building on his experience in strategy, Mutsuo held the role of Chief Strategy Officer from 2008 to 2011.He joined JTI at the Geneva Headquarters in 2011 as Executive Vice President and deputy CEO, and is also a member of the JT Board.

Why did you come to Romania?

JTI started to operate locally in 1993, as RJR, part of RJ Reynolds, one of the first international companies to come to Romania. JTI was also the first international tobacco company to set up a manufacturing facility in the country back in 1994. Since then, the JTI factory in Romania has become one of the most highly-regarded JTI production facilities worldwide, perceived as a center of excellence for its quality of execution and its overall cost efficiencies. On July 17, this factory opened its new enhanced production facilities, as part of a EUR 25 million investment program, generating over 125 new jobs. We are proud of our success story here and this is why I was glad to join my colleagues in Romania and attend the opening ceremony of the new production facilities.

 

How do you see the local market for cigarettes, compared with other markets? Is there anything distinctive?

This market is fiercely competitive. In Romania the three main international tobacco companies dominate the market. So, it is like a microcosm of the tobacco world in just one country. Winning in Romania is like playing on a global stage, because all major brands compete for a demanding consumer base.

 

What do you foresee for the local market? What about the European market?

Regarding the local market, development of the tobacco industry in the short, as well as the longer term depends on the legal framework, fiscal policy and an efficient strategy for fighting illicit tobacco trade.

As you know, the tobacco industry is extremely regulated. Romania is part of the European Union, so we are now under the same rules. Last year, the European Directive regarding tobacco taxation was enforced, providing excise levels up to 2018. Currently, the Tobacco Product Directive is undergoing review. Other elements need to be taken into consideration, as our industry is not immune to the evolution of the world economy. There may be a delay between economic recovery and increased consumer demand, for example.

 

What was the most difficult business decision for you?

As the JTI President said, in any challenging situation, we must identify and seize all opportunities to mitigate the negative impacts as best we can. I think that challenging situations do not demand difficult decisions, but more investment in innovation and, at the same time, better risk management.

In addition, the JT Group has a management principle called the “4S” model. Placing our consumers at the center, the 4S model is designed to ensure that in all our activities, we satisfy and fulfill our responsibilities towards consumers, shareholders, employees and society at large, and we believe that we need to always think about the balance of these key stakeholder groups when making a business decision.

 

What percentage of total production in the Bucharest factory is for export?

The company started business in Romania in 1993 by importing cigarettes from Germany. Since 2009, the tables have turned and today, the JTI factory exports not only to Germany, but also to other EU markets as well as South America and Asia. Currently, the Bucharest factory exports 65% of its production to more than 45 countries worldwide.

Can you talk about the trend for moving production facilities from Western Europe to Eastern and Central European countries?

As I mentioned, the JTI factory was set up here in 1994, as the first international tobacco company built in the local market. For almost 20 years we have been operating here, independently of any trends at European or global level. Romania is currently undergoing a development phase and it will further consolidate its position in Europe and globally. JTI has made a commitment to Romania, in the sense that it contributes to the economic, social and cultural development of the country. We will be here to support Romania on this journey.

How do you spend the marketing budget? How do you compare the restrictions in Romania with other countries?

In the European Union countries, advertising for tobacco products is extremely restricted, so this is also the case for Romania. Communication with our consumers is not only a commercial right, but also a duty as a responsible company, dedicated to providing high quality products. We use all possible legal means to communicate about our products with adult consumers.

 

Will JTI Romania ever be managed by a local executive? What can you tell us about the mobility policy? Approximately, how long does a manager spend in the same position in JTI?

With 25,000 people, representing 90 nationalities, JTI is an international business in which no one nationality dominates. JTI Romania is managed by local executives and over 70 % of Excom (Executive Commitee) members are local.

Romania has real professionals and genuinely talented people, therefore a lot of Romanian professionals are working in our HQ in Geneva. Indeed, we have a Vice-president, General Manager in Adriatica region (Croatia, Bosnia & Herzegovina, Serbia, Montenegro, Kosovo, Albania) who is Romanian. In JTI we offer people the chance to develop an international career that involves living and working in multiple countries. For those with the ambition and flexibility to move, it can be a life-changing experience.

I would like to add that we look after our people’s long-term interests and they look after ours. We listen to our employees, act responsibly and keep our promises. We reward our employees’ efforts and invest in their further development. In return, people treat their jobs as their own business and are proud to be part of JTI. In a 2010 Employee Engagement Survey, 94 % of JTI employees agreed that they are ‘willing to put in a great deal of effort beyond what is normally expected to help the company succeed’.

 

How long does it take to pass from a specialist position to manager?

JTI employees are able to shape their own future. In the last few years, over 80% of management appointments have been promotions from within.

Some people join JTI with significant background experience, so they are employed in senior positions right from the beginning. But there are also a lot of examples of people employed as juniors who showed real professional qualities, so they move up quickly to senior positions.

What was the most important lesson you learned during the economic crisis?

We learnt to be more flexible and creative, to use the resources available to us and strive for even better results than before. We got out of our comfort zone and overcame obstacles that we never thought possible before. Because of all this we grew to be a stronger company. The economic crisis lesson for us is that anything is possible with the effort and commitment of all our JTI employees.

 

How is the JTI business affected by the illicit commerce with cigarettes?

In the first five months of 2012, cigarette smuggling in Romania remained relatively constant. According to the May issue of the Novel Research Company study, illicit trade is at 13.3 per cent of the total market. In the last two years, contraband has been reduced significantly, from 36.2% in January 2010 to 13% in January 2012. But 13%  is still quite high, leaving room for improvement. Each percentage recovered from illicit trade would generate an additional EUR 30 million to government budget. Along with the three main producers, contraband represents the fourth most important competitor in the local market.

 

What are the ethical aspects that JTI employees must face in society?

JTI is respectful of each country’s culture, norms, legislation and decision-making process. Our industry is highly regulated. We respect the regulations of every country we operate in and, on many aspects and issues, we have set our own standards that go beyond what is required.

While our main focus is managing our responsibilities around the products we make, we also recognize and manage our many other responsibilities towards our employees, the environment and worldwide communities.

In Romania as well as at a global level, JTI is acknowledged as a responsible tobacco company, being an accountable and committed partner in all aspects of cultural and social life in the community.

 

What are the main challenges facing the tobacco industry in 2012?

The main challenge for JTI Romania is illicit trade, boosted in the past by fiscal unpredictability and constantly changing legislation.

As I mentioned, we work in a highly regulated environment, but we will continue to work in partnership with all relevant authorities, advocating a better regulatory environment and developing concrete programs.


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