Some Western Companies Stay Put in Russia Amid Sanctions

Despite the ongoing war and strict sanctions from the West, some Western companies have decided to stick around in Russia. This comes as unexpected news, considering the large number of multinationals that quickly departed after the conflict began.

Big names like Starbucks and McDonald's were among the first to leave Russia when the invasion happened, as they worried about backlash from customers if they stayed. However, over two years later, more than 2,000 foreign firms are still operating in the country, according to the Kyiv School of Economics.

Interestingly, around 1,750 companies have either scaled back or completely exited Russia since the war began. The challenge in leaving, with rising costs and complicated bureaucracy from the Kremlin, has made some firms reconsider their exit strategies.

Chris Weafer, an investment strategist with over 20 years of experience working in Russia, mentioned that many companies feel that it might be too late to leave. He noted that those remaining are now adopting a «keep our heads down» approach, hoping for better conditions in the future.

For companies from «unfriendly» states, selling their assets has become even more difficult, requiring them to take a significant loss and pay additional exit taxes. This is seen as a strategic move by the Kremlin to show that Russian life continues normally despite the sanctions, giving the impression that they can withstand Western pressures.

Unilever is one of the major companies still active in Russia, continuing to make popular products like Cornettos and Magnums. Other familiar names, like Burger King, also remain a common sight in the capital despite intentions to pull out.

Although staying in Russia doesn’t violate any sanctions, it has sparked criticism from various campaign groups. They argue that these companies are essentially bolstering the Russian economy, which is concerning, especially given the war in Ukraine.

Unilever explained its choice to stay, saying it wants to protect its employees and fears losing its assets to the government if it exits. They pointed out, though, that they are taking steps to limit their economic contributions to the Russian state. Burger King’s owner, RBI, has mentioned that it cannot exit due to its franchise structure.

Some local diners expressed their appreciation for the continued presence of companies like Burger King. While some feel that these corporations prioritize profit over their public image, others remember the importance of the jobs and familiarity these brands provide in uncertain times.