World brands are losing assets in Russia, and Russians are dealing with it in their own way. They don’t bother much with intellectual property. Copies of Coca-Cola or Fanta, for example, appear on the shelves. They also rename the McDonald’s chain, and proposals from the new owner are already in the office. While President Vladimir Putin says he welcomes the departure of Western brands, experts say “defunct businesses” cannot be kept back.
Cheerful and tasty, The same, Just like that or Open cash register – new management of the former branches of the fast food chain McDonald’s announced last weekthat he intends to choose one of these names, under which the popular fast food in Russia will revive. The new owner has already submitted the variants for approval to the local patent agency Rospatent, the American server CNN wrote.
Until recently, however, there was talk that McDonald’s in Russia would be renamed Uncle Vanya. “They announced that they were closing. All right, close them. But tomorrow McDonald’s will no longer be in these places, but Uncle Váňa,” State Duma Chairman Vyacheslav Volodin told the chain in March. From the design of the new logo, which immediately circled the Internet, it was clear that the Russians do not plan to make major changes with the chain. It was remarkably similar to the original American logo.
Similarly, the Russians tried to solve this with the popular drinks from the American company Coca-Cola. It stopped its activities in the country about two months ago. Although its products are still available in some stores, prices have risen by about 200 percent.
Russian company Ochakovo therefore came on the market with imitations of the popular drinks Coca-Cola, Fanta and Sprite, which she designed to resemble the world’s counterparts as much as possible. She named them CoolCola with the “cult flavor of Kokakola”, Fancy and Street.
The sale of assets continues
McDonald’s and Coca-Cola are among the largest Western brands that have decided to withdraw from Russia in response to the outbreak of the war. In particular, McDonald’s has cost the move tens of millions of dollars because it has continued to pay its employees or contractors in the country, for example.
The chain entered the Russian market with great fame more than 30 years ago and has gained considerable popularity among ordinary Russians. He eventually had almost 850 restaurants in the country. However, due to the Russian invasion of Ukraine, he withdrew two months ago and confirmed last week that he did not intend to return to Russia.
The US company now sells all its assets to the current operator and operating license holder, Alexander Govor. He has operated 25 McDonald’s restaurants in Russia under a franchise agreement since 2015, through his company GiD LLC.
However, many other companies have already announced their intention to sell their activities there, including, for example, the British tobacco company Imperial Brands and the energy giant Shell.
Some of them have already passed them on to local managers, leaving the company equipment in place. According to Natland analyst Petr Bartona, transporting them back to the West will not pay off for companies due to complications such as rapid departure and long distances.
“As a result, the equipment will either be sold to the locals or confiscated by the locals. And the locals can continue to do business with it. Especially when Russia is not making much of an intellectual property,” Bartoň adds for the online daily Aktuálně.cz.
However, the Russians became convinced that this was not so easy during the attempt to continue operating the German hobby market OBI. He completely withdrew from the Russian market a few weeks ago in record time. However, the Russian management of the chain refused to respect the closure of the stores, according to Forbes magazine, and opened the stores.
In this case, however, the uprising lasted only temporarily. The German headquarters of OBI Rusy cut off the company’s servers. She eventually handed over her 27 Russian branches to an unnamed investor. She didn’t even want to pay for them. The condition was that the company’s trademark would no longer be used in Russia. “We reiterate that the OBI group is not and will no longer be interested in Russia, either directly or indirectly,” the German headquarters said in mid-April. “Other information is only propaganda and external activity by Russia, which unfortunately the OBI group has no influence on,” she said in a statement.
Good thing they left, Putin said
Although Russian President Vladimir Putin himself, according to Reuters last Thursday he declaredthat he is basically pleased with the departure of Western brands from the Russian market, because so their place can be taken by domestic traders, their flight in the Kremlin has repeatedly provoked a considerable wave of resentment.
The departure of major brands such as McDonald’s or Coca-Cola prompted a law that would allow branches of Western companies in Russia to be nationalized. Currently the state according to Reuters with its approval has come into force, reportedly within a few weeks.
Russia can thus control the branches of those companies which, according to the state, would endanger the labor market or industry with their rapid departure. It would specifically affect companies with a share of more than a quarter in the hands of “hostile countries”. The takeover itself would take place with the help of appointed administrators.
According to Reuters, the new law may affect, for example, the Italian banking company UniCredit, the Austrian Raiffeisenbank or the fast food chain Burger King, which are still waiting for the situation in the country to develop.
“First and foremost, the government will apply the rules to large companies,” said Sergei Suchanow, a lawyer at RSP International. “In order to avoid administrators, they must show that they will not leave their Russian companies in the lurch,” he added.
Consultant Ulf Schneider added that he was working on permission for foreign companies to at least choose their manager themselves. “The sale is an option, but the conditions for it are not good,” he told Reuters.
At the same time, analysts add that a similar step, such as the introduction of this law, is likely to discourage Western companies from doing business in Russia even more.
Chances for the gray market and the growth of counterfeits
To companies that have already fled Russia, Putin has indirectly told Moscow that despite their departure, Moscow will find ways not to lose luxury goods and technology. “We are not going to cut it off,” he said in a video call with the leaders of the former Soviet states. “They want to squeeze us a little, but in the modern world, this is simply unrealistic, impossible,” he added.
However, the Russian president did not say how the country will actually maintain access to advanced materials, components or software. However, he suggested that a solution to Asian countries may be the solution.
“Representatives of our business are facing problems, of course, especially in the field of supply and transport. Nevertheless, everything can be adjusted and set up in a new way,” Putin added vaguely.
Server Business Insider a few weeks ago he suggested that the solution for the Russians could be a narrow-eyed eye over the gray market, ie unofficial sales outside the manufacturers’ distribution networks. The number of counterfeits is also expected to increase significantly, especially for luxury goods.
Without technology, businesses can’t keep it, analysts say
But analysts are skeptical of such statements. If the Russians try to replace some Western products, they will at least suffer from quality.
“In general, the more sophisticated the local business of Western companies, the harder it will be to replace it. Barton.
“That’s why Western sanctions are aimed at trade in technology components. The West has seen what the covid’s supply of chips has done to its industry, and is now trying to create a similar catastrophe in Russia,” the analyst said.
It recalls a time when the coronavirus pandemic was able to significantly complicate chip deliveries from Asia to Western countries. The lack of semiconductors used in various areas – from smartphones to cars – has severely disrupted the plans of key sectors of the economy. So far, for example, car and electronics manufacturers are struggling with it.
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