Why are some international companies in no hurry to leave Russia?

At the beginning of the full-scale Russian invasion of Ukraine, a large number of global brands, worried about their reputation, announced the suspension of their activities or a complete exit from the Russian market. However, many did not keep their promises. A significant part of international companies with factories on the territory of Russia stopped investments, but continued to produce and supply goods to their market. Such businesses actually sponsor Russian aggression in Ukraine with their taxes.

To leave or stay was a difficult choice, because the Russian market is huge. Those companies that decided to stop any activity suffered significant financial losses. Which giant companies in the 11th month of the war in Ukraine are still hesitating in their choice and who is watching these events.

Who monitors the exit of companies from the Russian market?

The most popular is the Yale University study https://som.yale.edu/story/2022/over-1000-companies-have-curtailed-operations-russia-some-remain. On the network, you can find many similar resources based on this list. The project is aimed at tracking the reaction of Western corporations to Russia’s war against Ukraine. The data is constantly updated by the teacher Jeffrey Sonnenfeld and his team of experts, researchers and students. They monitor public statements and company websites.

A team of analysts created a detailed list and divided the companies into five categories – A, B, C, D and F.

A — completely left the Russian Federation (335 organizations);

B — left, but with the possibility of returning (495 companies);

C — reduced operations (171 companies);

D — refusal of new investments/development (161 companies);

F — business as usual (227 companies).

Businesses that fell into groups A-D, according to a study by Yale University, provided up to 40% of Russian GDP.

However, there are more extensive lists. One of these is the analytical list of LeaveRussia https://leave-russia.org/uk, created on the initiative of Ukrainian volunteers.

Through their efforts, they formed a huge base of companies related to the Russian market. The list is regularly updated and contains a lot of additional information. For example, data on the number of personnel, income, capital and other indicators that show in detail how the sponsorship of Russian missiles works.

Procter & Gamble is the best sponsor of the war

Photo of Procter&Gamble products

After February 24, Procter&Gamble, along with hundreds of other international companies, made a series of high-profile statements: it condemned the actions of Moscow, announced a reduction in sales volumes, announced the cessation of any capital investments https://www.reuters.com/business/retail-consumer/pg- ending-new-capital-investments-reducing-portfolio-russia-2022-03-07/ and even promised a complete withdrawal from the Russian market https://artsakh.news/en/news/237743. However, the company did not keep its promises. They not only remained in Russia, but also did not stop the two huge factories.

“Many of our Russian colleagues and the people of Russia are facing challenges and uncertainty about their future, which are also important. We will support our Russian employees,” the company said in March https://us.pg.com/blogs/pg-european- operations-update/ .

She emphasized that she is reducing the assortment, but leaving in it “goods for health and hygiene, on which the everyday life of ordinary Russians depends.”

Thus, two P&G manufacturing giants continued to operate in the Russian Federation: the factory for the production of Gillette blades and razors in St. Petersburg and the household chemicals plant in the Tula region, which is the world’s largest producer of this company’s detergents. There they produce well-known brands Ariel, Tide, “Myth”, Tix, Ace, Lenor, Comet, Fairy, Mr.Proper and Pampers baby diapers.

Despite the promise, some manufacturers of household appliances continue to supply goods to the Russian market. Among such companies is the South Korean Samsung. According to the official statements of the corporation, it stopped deliveries to the Russian Federation back in the spring https://gagadget.com/en/business/166993-samsung-lied-despite-the-statement-about-the-suspension-of-smartphone-shipments-to -russia-the-company-plans-to-s/ . However, Samsung products continue to be sold on the market. And as of December 25, on the Russian personnel portal SuperJob there were more than a hundred vacancies at the request of “Samsung”. Mostly they are looking for sales consultants.

The Chinese telecommunications company Huawei is also not leaving Russia. They continue to supply their goods to the market through intermediaries. This was reported by RIA Novosti https://ria.ru/20221031/huawei-1828038261.html on October 31 with reference to Eldar Murtazin, the leading analyst of Mobile Research Group.

“The smart company Huawei supplies goods to the Russian market through a Chinese distributor. Xiaomi, the third largest manufacturer of smartphones in the world, works in a similar way. Moreover, during the New Year, these companies have sales, discounts, etc. on the entire range of products. Next year, as far as I know, there are also quite a lot of plans,” said Murtazin.

Back in the spring, the South Korean brand LG officially announced https://sundries.com.ua/en/lg-electronics-has-completely-suspended-supplies-of-equipment-to-russia/ about the suspension of supplies of goods to Russia, remaining diplomatically silent about its own plant in the Moscow region. The company’s Russian website and official service centers also continue to work.

A certain loyalty of Asian brands to Russian aggression is easy to explain. However, some Western companies are also clinging to the bloody Russian market. In particular, the multinational conglomerate corporation Philips from the Netherlands.

The German company Metro https://www.facebook.com/metro.ua/posts/4695230210582095 was unsuccessfully urged to leave the Russian market due to Russia’s terrorist actions. The management not only categorically refused, but also threatened the Ukrainian office with disconnection from product supplies for putting pressure on the corporation to leave Russia. In addition, Metro launched the Small and Medium Business Development Academy in the Russian Federation.

The French supermarket chain Auchan also quietly continues to operate in both markets. The head office of “Ashan” stated that the Russian population is allegedly not responsible for the unleashed war, and the company itself works for the benefit of ordinary people. And continues to pay taxes to the Russian budget. In 2020 alone, Auchan Retail Russia paid 167 million dollars into the budget.

Despite the criticism, the Swiss company Nestlé also continues to work in Russia according to the principle of the “basic right to food”. The company announced https://www.nestle.com/ask-nestle/our-company/answers/update-russia-ukraine that they will concentrate their activities in the Russian Federation not on earning, but on providing the necessary food (baby and medical food) .

PepsiCo is an American multinational food, snack and beverage corporation. They offer soft drinks, juices, chips, snacks, dairy products and other food under the brands Cheetos, Doritos, Lay’s, Mirinda, Mug, Pepsi, Pepsi Max, Pepsi Next, Sandora, 7up, Agusha, Chudo, Slov “Yanochka”, “Kindergarten”, “Mashenka”, etc.

The company suspended its activities in Russia in March, but already in September began to open vacancies.

The American global cigarette and tobacco company Philip Morris (Marlboro, Parliament, Bond, Chesterfield, L&M, Next, IQOS) owns a factory in the Leningrad region. The company said that it is deeply concerned about the situation, will stop investments, but will remain on the market.

Many brands that announced their withdrawal from the Russian market in the spring actually continued to work through franchisors. In particular, the American chain Gap promised to leave the Russian Federation back in March. At the same time, according to Reuters https://www.reuters.com/business/retail-consumer/exclusive-gap-says-russia-deliveries-stopped-march-its-clothing-kept-coming-2022-10-31/ , from March 11 to June 16, supplied clothes worth 5.2 million dollars to Russia. Later, caught in a scandal, the company decided to close its stores in Russia.

As “Telegraf” previously reported, the Minister of Foreign Affairs Dmytro Kuleba calls for a boycott of such companies until they stop sponsoring the war in Ukraine and leave Russia for good.

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