After Russia’s invasion of Ukraine on February 24 last year, many large Western companies announced plans to end their operations in Russia.
A study conducted by the University of St. Gallen in Switzerland shows that until the end of last year, hardly any company actually fulfilled its promises.
The study examined 1404 subsidiaries of companies registered in the European Union and G7 countries, which worked in Russia at the beginning of the war.
AS OF NOVEMBER 2022, LESS THAN 9% OF THESE COMPANIES HAVE SOLD AT LEAST ONE SUBSIDIARY REGISTERED IN RUSSIA. THE RESEARCHERS CONCLUDE THAT IN THE FOURTH QUARTER OF 2022 THESE INDICATORS HAVE ACTUALLY NOT CHANGED.
Professors Simon Everett and Niccolò Pisani write – research data shows that the Russian market was mostly left by companies that had low profits, as well as high expenses for employees.
Everett and Pisani acknowledged that more companies from the United States left Russia than from the European Union and Japan.
AT THE END OF LAST YEAR, LESS THAN 18% OF THE ASSETS OF THE US SUBSIDIARY COMPANIES, 15% OF THE ASSETS OF THE JAPANESE COMPANIES AND ONLY 8.3% OF THE ASSETS OF THE EUROPEAN UNION COMPANIES WERE SOLD.
Of the remaining European and G7 companies in Russia, 19.5% were owned by Germans, 12.4% by Americans and 7% by Japanese.
“This study questions the willingness of Western companies to distance themselves from an economy that Western governments consider a geopolitical adversary. The study actually proves that national security issues and geopolitics weaken globalization,” the researchers say.
BARCLAYS BANK ANALYSTS INDICATE IN THE PUBLISHED REPORT – ALTHOUGH MOST COMPANIES PUBLICLY PROMISED TO LEAVE RUSSIA BECAUSE OF POLITICAL PRESSURE AND THREATS OF SANCTIONS, IN REALITY A FEW OF COMPANIES HAVE DONE IT.
The companies have explained that the Russian market has not been abandoned because “there are many problems associated with leaving”.
Companies that have suspended advertising and marketing activities, as well as reduced product offerings, want to remain active in Russia.
However, these companies will face much greater pressure and the fact that more and more sanctions will be imposed against Russia. Among those companies that have promised to leave Russia but are not doing so are Henkel, Philip Morris International, JDE Peet’s, CCH and Carlsberg.
“Henkel” has more than once announced plans to leave Russia. It explained to investors what the consequences of such an action could be, as approximately five percent of sales results and ten percent of profits are attributable to the Russian market. “Barclays” admits that “Henkel” will narrow down its activities in Russia without making new investments.
Of the 29 companies that produce consumer goods, which are served by “Barclays”, 15 promised to leave Russia. According to the bank’s analysts, only six cases are known when this actually happened.
