Special Report: How Did Foreign Companies React to the Russian War Against Ukraine?
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The invasion of the Russian army shocked the world to its core. Many countries imposed sanctions on Russia after the invasion. But how did foreign companies trading in Russia react to the war? We wrote a report about the 50 biggest foreign companies in Russia and discovered some interesting insights.
Our report and the results
In 2021 Forbes Russia published a list of the 50 biggest foreign companies trading in Russia. This list contains a lot of western companies like IKEA, Apple, Volkswagen, Unilever and McDonalds.
Despite pressure to cease all business activity in Russia, many businesses from abroad actually didn’t stop their activities. We did research on the 50 biggest foreign companies in Russia and discovered some interesting insights on their activities after the war started in Ukraine. According to data from March 7, 2022, only 22% of the largest foreign companies in Russia have closed their doors.
You can download our report now for free to discover more interesting insights about foreign companies in Russia and in which way they reacted to the war in Ukraine.
The background of this report
On February 24 2022 the Russian army invaded their neighbor Ukraine and shocked the world. Although the US intelligence warned this would happen, some experienced experts on international relations didn’t expect this outcome.
The events after the invasion developed extremely quickly. In less than a week the European Union, some Asian countries and the United States of America sanctioned Russia for their invasion.
Also many big companies announced to stop activities in Russia as a reaction to these sanctions. It has not been clear though what the overall reaction of foreign companies in Russia has been. By writing our report, we tried to discover this. Below you can read some insights from our report.
Our method of research is not rocket science and very clear: We checked all the 50 companies from the list from Forbes Russia from 2021 and made an overview of every foreign company on that list. By doing so, you will get an overview of what these companies are doing and it will give you insight into their decisions and behavior.
One of the biggest announcements of ceasing operations in Russia was made by the Swedish furniture brand IKEA. Perhaps you’ve seen the images from Russian IKEAs where people were queueing to buy some products before the shop would close.
However, IKEA is one of the few who totally stopped trading in Russia. Many other companies are still operating in the country.
In our report we discovered that Sixty six percent of all foreign companies in the top 50 in Russia, are not closing their doors. Twelve percent are partially operating and only Twenty two percent stopped all activity.
Companies that are partially closing
Not all companies are deciding to leave Russia or to stay. Some companies are simply changing their strategy. As we told you before, twelve percent of the foreign companies in Russia decided to partially close.
It means that companies in Russia for example stop advertisements, make donations for Ukraine or stop investing in Russia. We can give you some examples of these partial closures: hysical shops are not closing but online activities do. Also local marketing activities could be completely halted but sales continue.
Companies that are staying: the economy
After the war started the West sanctioned Russia with hard economic consequences. The Russian Ruble decreased in value and many Russians are losing their savings and money. Also the so-called olichargs, like the famous owner of the London soccer club Chelsea Roman Abramovich, are sanctioned. The olichargs are known to be close to Putin, as they depend on his money.
Companies which decide to stay in Russia will feel that the economy has changed. Sales and revenue won’t be as high as before the war.
It is expected that for example tobacco giant Philip Morris, which is the biggest foreign company in Russia, will lose a lot of money over the Russian war. The company also had to close a factory in Ukraine. It shows that companies which will stay will face harder times.
What does this tell us about foreign companies in Russia?
Foreign companies in Russia are concerned about leaving the country due to financial consequences. Companies need to pay out their shareholders and in the meeting rooms it could have been decided that closing would be too costly.
On the other hand not closing could cause huge consequences in the west. Coca Cola, which is not even a part of the 50 biggest companies in Russia, decided to stay in Russia. Many people are now announcing to boycott the soft drink giant.
Companies which decide to stay could be boycotted in the Western world. In Poland a local initiative started to not buy products from Russia. You can recognize these products by the barcodes starting with 4 and 6.