Russia has been waging a full-scale war against Ukraine for almost a year. According to UN data, almost seven thousand civilians died in the war.
Starting October 10, 2022, Russia will strike critical infrastructure, leaving millions without electricity, water, and heat.
The Russian Federation explains that its actions are «a consequence of strikes on military infrastructure provoked by Kyiv’s reluctance to negotiate.»
Russia is filled with European and American technologies as much as possible, Forbes reports. From Microsoft products to Amazon, as well as working with financial institutions and oil companies.
How will the exit of companies from the Russian Federation help?
Exiting the Russian market is an opportunity to exert economic pressure on the Russian Federation because business is a huge taxpayer in the state treasury.
Foreign companies pay taxes to the budget of the Russian Federation, that is, they sponsor the aggressor state
Foreign companies operating in Russia pay 20% of taxes to its budget. According to a Yale University study, companies that left the Russian market accounted for 40% of the country’s GDP.
«The Russian economy is significantly dependent on foreign technologies, goods, and capital, which, in particular, are used by the Russian leadership to wage wars of aggression. By stopping the financing of Russia’s military machine, international companies can stop the war by preventing it from going beyond the borders of Ukraine and becoming global», — note the researchers, analysts of the KSE Institute, who are engaged in covering the positions of companies that have left, are going to leave and have not left the Russian market. founders of the Leave Russia project.
Of course, companies leaving the Russian market are also experiencing financial losses.
Companies that have left the Russian market lose profits, but usually these are small amounts
Sportswear company Adidas, for example, lost $261 million, half of its revenue in the region and 1% of its total revenue. In June, information appeared that the company does not plan to resume commercial activities in Russia.
However, these losses do not compare to the possible losses due to a global war.
Over 1,000 Companies Have Curtailed Operations in Russia. Source: https://som.yale.edu/sites/default/files/styles/scaled_1344_/public/2022-04/companies_graphic_vers_bmw_fiverr.webp?itok=_XJHAr2U
According to the data of Yale University scientists who maintain the register of foreign businesses in the Russian Federation, more than 1,385 foreign companies operating in Russia. Of them, 317 have completely left the Russian market, 500 have temporarily suspended their activities or are planning to exit, 169 have reduced production, 159 have suspended new investments, and 240 continue to work without any changes.
According to LeaveRussia, the largest number of companies that continue to work in Russia belong to the United States (food company Cargill, manufacturers of household chemicals Colgate-Palmolive and Procter & Gamble, manufacturers of Mondelez and Kraft Heinz products, Subway restaurants, Hard Rock Cafe, Hyatt hotels, pharmaceutical corporation Pfizer , technology companies Snap, Vimeo, Patreon), Germany (Metro, confectionery corporation Ritter Sport, divisions of Siemens, building materials manufacturer Knauf, product manufacturer Hochland) and France (building stores Leroy Merlin, hypermarkets Auchan and Decathlon, product manufacturers Bonduelle, Lactalis and Danone , clothing manufacturers Lacoste and Etam, energy corporation Engie, chemical and pharmaceutical corporation Sanofi, cosmetic brand Yves Rocher).
Some companies remain: their position
For example, the German chain of stores Metro said back in March that it feels responsible for more than 10,000 of its employees, because «these people bear no personal responsibility for the aggression against Ukraine.»
Metro retailer confirms plans to stay on Russian market
Already in November, information appeared that the retailer does not plan to leave the Russian market.
The company also threatened the Ukrainian branch with blocking the supply of goods due to pressure to exit the Russian market. Businessman and ex-minister of the Cabinet of Ministers Dmytro Dubilet told about it.
Colgate-Palmolive explained in March that they continue to sell only basic health and hygiene products.
Grain giant Viterra continues to operate in Russia, at least for August, despite international sanctions.
A spokesperson for Cargill’s Russian operations said that the company does not plan to leave Russia.
Consequently, some companies continue to pay taxes and finance Russia’s war against Ukraine.
Anna Ostymchuk
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