Fashion companies Benetton and Lacoste, cosmetics brand Clarins, machine manufacturer Liebherr and energy company Fortum.
For example, these western companies continue to operate in Russia.
Although after the start of the war, many Western companies announced that they were leaving Russia, very few actually left.
This will be solved by the professor by Simon Evenett and a professor Niccolò Pisani from a recent statement (you switch to another service).
According to the survey, only 8.5 percent of the companies had sold at least one of their Russian subsidiaries by the end of November.
The survey looked at approximately 1,400 companies headquartered in G7 countries and EU countries, which have previously reached a turnover of more than one million dollars in Russia.
A formula familiar from history
Evenett, who works as a professor of economics at the Swiss University of St. Gallen, says in an interview with that he himself was surprised by the research result.
He expected that a greater proportion of companies would have sold their subsidiaries, as there has been a lot of pressure on companies to withdraw from a country waging a war of aggression.
– Our research results repeat a pattern familiar from history, says Evenett in a video call.
– When companies are voluntarily pressured to leave a country in a geopolitical conflict, we typically see few exits. The same thing happened in apartheid-era South Africa.
Voluntariness is therefore not enough. If Western companies are wanted out of Russia, according to Evenett, states must introduce more aggressive measures.
Professor of international business at the University of Turku Kari Liuhto considers Evenetti’s and Pisani’s investigation duly done. According to Liuhto, its research result gives a lot of food for thought.
While the West has imposed sanctions on Russian trade flows, Western companies operating in Russia have been forgotten, says Liuhto.
– Through this, Russia and the terrorist activities of the Russian state are possibly supported. Yes, this situation should really be addressed, says Liuhto.
The Finns stand out
According to Evenett, divestitures of Russian subsidiaries were rarest in the service and agricultural sectors and in industries related to natural resources. On the other hand, there were more of them in industry.
There were clear differences in the nationalities of the companies that stayed and those that left.
The Finns stood out in the survey. Compared to their size, Finns were overrepresented among those who had sold their subsidiaries. According to Liuhto, other surveys also show that Finns have withdrawn from Russia more diligently than average.
For example, food manufacturer Atria, construction company YIT and forest machinery manufacturer Ponsse have sold their Russian operations.
– The Finns have understood that Russia can suddenly become Putin’s hostage, Liuhto says.
On the other hand, the same cannot be said about German and Italian companies. They have sold less than their Russian subsidiaries.
Why are so many left?
It is not easy for Western companies to give up their Russian subsidiaries and the sale process takes time. This is one reason why so few have actually left the country.
CEO of the East Cham Chamber of Commerce Jaana Rekolainen says that Russia has only tightened its grip on Western companies. First of all, all business transactions are subject to a permit. At the end of last year, there were also new conditions for making a deal.
– There must be an external appraiser for every store who determines the price and a discount of at least 50 percent must be given on this price.
The buyer must also be given a payment period of one to two years. When the process has progressed to the payment stage, the money still needs to be repatriated to the company’s account, says Rekolainen.
Many Finnish companies have also said that they have not succeeded in selling their Russian operations due to the official process.
Energy company Fortum is one example. In November, the CEO Markus Rauramo told that the separation from Russia is “near the end”. However, the deals still require the Russian administration and possibly even the president Vladimir Putin approval.
For example, Pekkaniska, which rents cranes, has also said that it is in the middle of the sales process. The use of the company’s brand has been discontinued in Russia, but the subsidiary continues in the country, Pekkaniska’s communications manager Kristina Virtala told at the beginning of February.
Some don’t care about the war
However, the difficulties of getting out of Russia do not fully explain why only a fraction have sold their Russian subsidiaries. Some companies just don’t care about the war of aggression.
There are differences in attitudes and each company evaluates the situation from its own starting point, says Rekolainen.
– In some of our European competitor countries, companies take a more business-oriented approach. There is no desire to give up profitable business.
On the other hand, some companies feel a sense of obligation towards their Russian partners, employees and customers, Evenett estimates.
A sense of obligation explains, for example, the continuation of the Russian operations of the Finnish pharmaceutical company Orion. The pharmaceutical company continues to sell medicines critical to patient care in Russia.
– We have looked at that matter from the point of view of patient safety, Orion’s CEO Liisa Hurme said to last week.
What’s the solution?
According to Evenett, it is likely that the withdrawal of Western companies from Russia will increase. The question is more about how much and how quickly.
Evenett estimates that more attention would be paid to the companies that remained in Russia, which would probably increase the number of withdrawals.
Kari Liuhto agrees. The essential thing is how the customers of Western companies here in the West react to being in Russia, he says.
That is why the various listings of companies that continue to operate in Russia are valuable. This type of list is kept, for example, by Yale University in the United States (you go to another service).
According to Liuhto, the United States plays a big role in terms of Western companies’ operations in Russia. If the companies were to be put on the US sanctions list, operations would become significantly more difficult.
– The United States would need more leadership on this economic side.
The subject can be discussed until February 17 at 11 p.m.
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