The list of Western companies leaving Russia is growing by the hour. Whoever leaves has been given 3 options by the Russian government. A series of big names remains, although this can be questioned.
From electronics company Samsung to the Swedish furniture maker IKEA, accommodation site Airbnb, the luxury companies Prada and Chanel, the American tech groups Apple, IBM and Microsoft, the German chemical giant BASF, car brands Rolls Royce and Volkswagen and the oil giants BP, Exxon Mobil and Shell. A series of researchers from the Yale School of Management hold a list which is replenished daily.
Nationalization threatens
In most cases, there will probably not be a sale. The company’s offices or production facilities will simply be liquidated.
Russia is aware of the risks of mass layoffs that this entails. It therefore threatens foreign companies with what amounts to nationalization.
If you want to leave Russia, you have three options
The government has said that foreign companies wishing to leave Russia three options have:
- Reconsider and stay in Russia.
- Allow foreign shareholders to transfer their assets to Russian partners. That means they could return to the Russian market at some point in the future. Some investors have already opted for this option, according to a Kremlin spokesperson.
- Complete the shutdown and lay off all employees. The Russian authorities will then consider this an “intentional bankruptcy”. Which gives them the right to intervene to save jobs (read: nationalize). “Intentional bankruptcy” can also lead to criminal prosecution.
For some it remains ‘business as usual’
UPDATE: Also McDonald’s, Starbucks on Coca Cola ceased their activities in Russia
There are also companies for whom it remains ‘business as usual’ in Russia. Notable names include Coca Cola, PepsiCo, Nestlé, McDonalds and Starbucks. Also AB Inbev continues to operate in Russia through a local subsidiary.
The above companies are not all in the same situation. That McDonald’s remains active in Russia is according to Yale professor Jeffrey Sonnenfeld ‘an anomaly‘, as it controls more than 85 percent of its restaurants there. That in contrast to a company like Starbucks, which is hampered by franchise obligations. Also pharmaceutical companies such as Astra Zeneca and competitor GSK stay activebut for humanitarian reasons.
Boycott campaign on social media
McDonald’s, Coca-Cola and PepsiCo, the world’s largest food brands, are already facing a social media boycott campaign due to their refusal to leave Russia. The New York state pension fund has also urged those companies to reconsider their stance.
Cosmetics company Estée Lauder was on the list of companies that will remain active in Russia. On Monday, the company announced that it all the shops it owned there would close and would stop shipping products to the country.
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