Dhe list seems long: the Shell oil company, the car manufacturer Nissan and Deutsche Telekom – more and more companies have left Russia since the beginning of the war.
The economist Simon Evenett from the University of St. Gallen sees things differently. For him, there are still far too few companies that have turned their backs on the country. At least according to a study by Evenett and his colleague Niccolò Pisani: Just 8.5 percent of the companies from the G-7 countries and the EU that were active in Russia before the outbreak of war closed at least one of their Russian subsidiaries . “Compared to the widespread claim that many Western companies have left Russia, this is a small percentage,” Evenett told FAZ
Others have long since given up
Michael Harms counters. Harms is the executive director of the East Committee. “Such statistics are misleading,” he said at the association’s spring press conference in Berlin. The topic of Russia has long since been written off for most executives, “also for the near future”. It is true that some companies are still active in Russia – such as the dealer Metro or the medical technology and health group Fresenius. Above all, however, they are companies from the humanitarian, medical or agricultural sectors – all sectors that were deliberately not sanctioned by the EU. But there is no new business here either.
Others, who clung to their Russian business for a long time, gave up long ago. Just like the mechanical engineering group GEA. “Numerous sanctions on machine or plant parts, which severely restricted our spare parts business and our technical service work, were the reason for reducing our activities in Russia.” GEA therefore only “maintains limited operations to supply the local population”.
How does that fit with Evenett’s study results? It is difficult to determine which companies are still active in Russia, says Harms. What he means by that: There are companies that would have liked to give up their business in Russia long ago, but are unable to. Because retreating is not that easy. “The Russian state is now doing everything it can to prevent another exodus of foreign companies,” says Harms.
According to Harms, strategically important sectors such as the energy sector even need personal approval from Russian President Vladimir Putin for a withdrawal. “But they don’t get this.” All other companies would have to have their withdrawal approved by a government commission in Russia. The conditions for this were unclear for a long time.
Only at the end of last year did the Russian government stipulate that companies from “unfriendly states” must first have their subsidiaries appraised before selling them. The company can then be sold for half of the determined company value. If the foreign company decides to sell, it has to pay an additional 10 percent of the purchase price to the Russian state. The latter is particularly problematic because the companies are also being accused of financing the Russian state and thus also indirectly the war against Ukraine with their sale. The economist Evenett also reports of such difficulties that make it difficult or even prevent a sale by foreign companies.
The Swedish furniture giant Ikea recently showed how tedious the withdrawal can be. The furniture group decided in March last year to stop all business with Russia. In June it became known that Ikea wanted to sell its three production sites, among other things. Just last week, the Russian government commission finally approved the sale to Russian investors.
A 100% withdrawal is highly complicated and time-consuming, says Harms. Even if most companies wanted to leave the country, this would not be possible from one day to the next. This is another reason why statistics on foreign companies in Russia are difficult. For example, the automotive supplier Continental states that it is aiming for a “controlled withdrawal from the Russian market”.
Attempts at influencing by the Russian authorities
And even after full withdrawal, problems can still arise. This was recently experienced by the DIY chain Obi, which sold 27 stores to a Russian investor for the equivalent of 10 euros. According to the group, there had previously been “attempts to influence the Russian authorities” – as already reported by other companies. The local management had to keep the branches in Russia open, contrary to the instructions of the Obi headquarters. After the sale was completed, it was supposed to be the end of the Obi brand in Russia. But the buyer continued to use the Obi brand even after a transitional period had expired. The hardware store chain, on the other hand, is taking legal action. Still, Obi may have been lucky: The company ultimately withdrew from the Russian market before such a withdrawal was made significantly more difficult by further Russian sanctions. It’s harder for those who are still here.
