When the conflict between Russia and Ukraine began in the first quarter of 2022, numerous foreign companies announced their departure from the country ruled by Vladimir Putin.
Some companies did it by their own decision, others were pressured by their consumers and others, those that did not have large businesses there, sought to capitalize on the decision to leave an invading country for their benefit.
In time, large multinationals announced their departure from Russia or sold their assets to local companies, such as Burger King, Apple, Nestle, Sturbucks, Coca-Cola, H&M, McDonald’s, PepsiCo, Electrolux and a long list.
“The invasion of Ukraine and the subsequent sanctions have made it impossible for us to continue operations in that country,” Electrolux said when it made the decision to leave Moscow. A country where in 2021 its sales represented 4 percent of the total business in Europe and 1.6% of the global business.
“The Russian invasion of the Ukraine and the subsequent sanctions have made it impossible for Electrolux to continue its business in that country. The decision to sell the Russian business to local management is intended to allow for a responsible and controlled exit. The divested company will continue to service household appliances hitherto sold by Electrolux in Russia. Electrolux will no longer produce in Russia and will not supply any appliances to the new company,” the company added.
Foreign companies in Russia
But not all foreign companies left Russia. Finally, almost a year after the invasion, the European and American firms left by Moscow do not reach 10 percent.
The Swiss investigation overturns the widespread belief about a mass exodus of companies.
The study was conducted by researchers from the University of St Gallen and of the Lausanne IMD Institute and says that the total number of companies based in countries of the European Union and in one of the members of the G7 that left Russia does not exceed 8.5 percent of the total.
A statement from the University of St. Gallen based on the study tells her that there was “a very limited withdrawal of companies from the European Union and the G7 from Russia” and that with the analysis they seek to “challenge the narrative that there is a vast exodus of western companies leaving that market”.
“Numerous companies based in these nations resisted pressure from governments, the media and NGOs,” the note added.
The result, according to what the Swiss university statement says, “questions the willingness of Western firms to exit economies that their governments now consider geopolitical rivals.”
“When Russia invaded Ukraine, a total of 2,405 subsidiaries of 1,404 EU and G7 companies were active in Russia. By the end of November 2022, less than 9 percent of these companies had sold at least one subsidiary in Russia, the research team found. These exit rates were little changed in the fourth quarter of 2022,” he explains.
Pressure on Western firms to quit Russia is intense. So Niccolo Pisani & I checked how many Western companies finalized sale of 1 or more subs in Russia since conflict broke out. Less than 9% have. Graphic shows our findings. Paper can be obtained here: https://t.co/s1ea4wQCnO pic.twitter.com/qHMdsAOgMz
— Simon J. Evenett (@SimonEvenett) January 19, 2023
The complete study.
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