29.1 C
Friday, June 21, 2024

Western firms in no rush to leave Russia – Ukrainian data

Fewer than 10% of foreign companies have so far divested from the sanctioned country, according to the Kiev School of Economics

Around 200 foreign companies have so far exited the Russian market amid Ukraine-related sanctions, representing fewer than 10% of the international brands that do business in the country, new data has shown.

The Kiev School of Economics (KSE) conducted an analysis of 3,157 foreign firms that operated in the Russian market prior to the start of Moscow’s military operation in Ukraine as part of its Leave Russia project.

According to its calculations, only 213 of these companies have divested from the sanctioned country in the past year, which is roughly 6.7%. Some 473 have announced plans to leave, but haven’t executed them so far. More than 2,400 of the companies continue to do business in the country, despite roughly half of them being forced to curtail their operations to various extents.

The head of the project, Andrii Onopriienko, warned that it would become more difficult for firms to quit the Russian market without incurring losses as time passes.

There are a lot of companies that did nothing or still continue to wait. And after one year of war, many companies will lose the opportunity to sell their businesses and will continue to lose because, finally, those assets could be nationalized or bought at a very cheap price,” he said, as quoted by the Washington Post.

Under regulations introduced by the Russian government last year, companies that want to divest of their assets in Russia must first seek permission from the country’s authorities. The measures were introduced to protect the Russian economy and consumers after many Western brands announced their intentions to leave the market as a result of sanctions, which have made it difficult to continue operations due to logistics and supply-chain problems.

The Russian authorities remain optimistic about the future of the economy despite the exit of foreign brands. President Vladimir Putin recently said companies that quit Russia are leaving behind a “good legacy,” which is eagerly picked up by domestic companies and entrepreneurs, who “successfully” continue their work. Russia has also been actively reorienting both imports and exports from ‘unfriendly’ countries and companies to new markets, and introducing import substitution mechanisms, which help to keep the domestic market well-stocked.

Read more

Opening ceremony of the first Belarusian Swed House store in Moscow
IKEA replacement opens first store in Russia

The Russian government also recently approved several deals that will see popular products or their analogs return to the country’s market. Just this week, reports emerged that clothing stores that used to belong to Spanish retail giant Inditex, including Zara, Pull&Bear, Bershka and Massimo Dutti, will reopen in the coming weeks under new brand names after they were sold to a new owner. On Saturday, Belarusian furniture maker Swed House, which sells IKEA-like home goods and products, opened its first store in Moscow’s Shchelkovsky shopping mall.

For more stories on economy & finance visit RT’s business section

April 16, 2023 at 05:51PM

Most Popular Articles