China News Service, May 25 (Zhang Naiyue) Starbucks Recently, it announced that it will end its 15-year operation and withdraw from the Russian market, becoming another giant company that has left Russia since the Russian-Ukrainian conflict.
Under the risk of conflict between Russia and Ukraine, hundreds of multinational companies choose to completely withdraw from their business in Russia or “press the pause button”. Is there a more complicated plan behind it? How will Russia deal with the economic and social impact of this wave of foreign companies “withdrawing from Russia”?
A closed Starbucks coffee shop in the center of St. Petersburg, Russia, on May 23, 2022.
Starbucks, McDonald’s … Hundreds of foreign companies evacuated
A study by Yale University in the United States shows that since the outbreak of the Russian-Ukrainian conflict, hundreds of foreign companies have withdrawn from the Russian market, covering fields such as IT, retail, catering, finance, and film distribution.
Data map: McDonald’s in Russia.Statistics from the study show that as of May 24, 329 foreign companies were determined to completely withdraw from Russia, and another 446 foreign companies announced to reduce most or all of their operations, but retained the opportunity to return to the Russian market.
When these foreign companies announced their withdrawals, they used different strategies to avoid too much “hurt”.
Fast food giant McDonald’s opts to sell Russian business to current franchise holder to operate under new brand; automaker Renault It has also agreed to sell the entire stake to the Moscow city government and partners to produce new products under local brands.
In addition, there are not a few companies that do nothing and wait for an opportunity after a complete suspension of business. Adidas , which has been operating a brand in Russia for many years After “pressing the pause button”, it is now faced with a difficult choice: sell the company to Russian buyers, buyers from other countries, or change the logo. Russia’s “Izvestia” also revealed that Adidas is also considering returning to the Russian market.
There are also companies that have decided to relocate as a whole and provide employees with work visas and residences in the new country; many financial companies have made more decisive decisions to sell all their investments in Russia, and airlines have made more decisive decisions not to fly over Russian airspace.
Worried about losing the US market under the balance of interests?
Why did these foreign companies leave Russia in such a hurry? The “Lenta” news network quoted economist Salihov as saying that in the context of sanctions, many companies are worried that Russia’s response may affect the situation of foreign companies, and the risk of staying in the Russian market has increased.
Data map: GUM, a department store on Red Square in Moscow, Russia.
The Russian Federation of Industrialists and Entrepreneurs (RSPP) pointed out that for most companies in the consumer sector, the Russian market is not their priority target, and they chose to suspend business in Russia because they were actually worried about losing the more promising US market.
In addition, in the “Declaration” of the withdrawal of these enterprises, they mentioned “affected by the situation in Ukraine”, which seemed to demonstrate their “sense of social responsibility”. But, is this the truth?
Analysts pointed out that these companies know that “wearing a moral coat is good for profit”. As for whether withdrawing from the Russian market will produce any practical social benefits, such as speeding up the end of the conflict, it is basically out of its scope of consideration.
The trend of “withdrawing from Russia” strikes, and Russia sees tricks and tricks
Shortly after the sanctions were imposed by the West, Russia first signed a presidential decree on “Interim Procedures for Fulfilling Obligations to Certain Foreign Creditors”, allowing Russian states, companies and individuals to pay foreign creditors in rubles, and then announced “Countries and Regions Not Friendly to Russia”. List”, laying the foundation for a series of countermeasures thereafter.
FILE PHOTO: Russian President Vladimir Putin.Subsequently, the Russian government drew up a list of 59 foreign companies that may face nationalization due to cessation of operations in Russia or withdrawal from the Russian market. Entering the list means that the violating company and its management will face countermeasures from Russia, including freezing accounts and assets, introducing external management and nationalizing properties.
At the same time as the multi-pronged approach in the policy field, Russia is constantly calling for accelerated import substitution and ending its dependence on the West.
In fact, Russia has implemented import substitution since 2014, but this year’s large-scale sanctions and the wave of “exit” of foreign companies still bring a huge test.
Due to the complexity of the production process, Russia will find key imported components and ways to replace them through trial and error, said Yeni Kolopov, president of the Russian Academy of Economics.
Two sides of the coin: lost markets are hard to regain
After a large number of foreign companies announced their withdrawal from the Russian market, more than half of Russian respondents in a survey conducted by the Russian Public Opinion Research Center believed that the withdrawal of foreign companies from Russia would affect their lives to some extent.
People line up to check out at an IKEA store on the outskirts of Moscow, Russia, March 3, 2022. On the same day, the Swedish home furnishing brand tweeted It has decided to temporarily close all its stores in Russia and suspend all purchase plans in Russia and Belarus.
Concerns among Russians focus on rising prices, inflation, lack of access to auto parts, unemployment and access to medicines.
But from another point of view, for foreign companies, once the market share after exit is occupied, it will be difficult to regain.
First of all, local Russian brands and manufacturers are also considered to have great potential. Coupled with the support and encouragement of the government, many local companies have tried to replace foreign companies by buying businesses and brands.
Secondly, the withdrawal of big international brands can make room for SMEs to survive. According to statistics, in the field of clothing, 80% (about 4,500) of clothing companies in Russia are online. These designers and small companies promote and sell their products through social networks.
In addition, products from other countries may enter the Russian market. According to “Izvestia”, taking office software as an example, Russia’s My Office, LibreOffice and China’s WPS are all considered to be Microsoft Alternative to office software.
“Russian newspaper” said that companies from Turkey, India and Iran are also in comprehensive negotiations with Russia and plan to open stores in Russia. (Finish)
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