Dusseldorf After the Russian invasion of Ukraine, more and more Western companies are withdrawing from Russia. After 165 years in Russia, Siemens Energy stopped doing new business with the country. The company strongly condemns Russia’s military aggression against the sovereignty of Ukraine, the board of directors wrote to employees on Wednesday.
Get out of Russia: The list of corporations that are restricting their business with the country or ending it altogether is getting longer and longer. After large oil and energy companies such as Shell and BP had already announced their withdrawal from the Russian market at the beginning of the week, more and more companies from a wide range of sectors followed on Tuesday and Wednesday – also in Germany.
BMW stops production in and exports to Russia, Siemens stops its new business with the country, Volkswagen has at least suspended deliveries of the vehicles, MAN has stopped deliveries of trucks and spare parts to Russia, and Daimler Truck has stopped production and the Discontinued sale of trucks and considering complete withdrawal.
While many companies initially reacted cautiously, they no longer shy away from more radical measures. Russia is threatened with a mass exodus of Western companies on a scale and speed that observers have never seen before. The investments from three decades after the collapse of the Soviet Union in 1991 are wiped out within a few weeks.
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Andreas Knaul, head of the Russian business of the major law firm Rödl & Partner, says: “In view of the rapidly changing situation, all companies currently connected to Russia are probably questioning the joint business.”
>> Read here: These companies are shutting down their business with Russia
According to the German-Russian Chamber of Commerce, more than 3,500 companies with German capital are registered in Russia. Their number fell significantly as a result of the annexation of Crimea – and is likely to continue to fall because the boardrooms of many local companies are currently wrestling about business with Russia, as surveys by the Handelsblatt show. For example, the committees of the refrigerator and crane manufacturer Liebherr are advising “on the further direction of our activities in Russia”. SAP and the supplier Bosch are also discussing this.
Western companies don’t just worry about their reputation. Due to a lack of products as a result of destroyed supply chains and the sanctions, local production and sales are also becoming increasingly unattractive from an economic point of view. Companies would also have to check their customers and business partners to see if they are on the sanctions list, which could mean the end of cooperation, explains Russia expert Knaul.
In addition, Moscow tightened capital controls on Wednesday: initially until March 31, companies from countries that have imposed sanctions on Russia are no longer allowed to transfer any money abroad. At the beginning of the week, the Russian central bank had already ordered that companies based in Russia had to convert 80 percent of their export earnings into rubles retrospectively from the beginning of the year. And some Russian banks have been banned from making payments in the Swift system.
Many companies cannot work under these conditions. Because of the measures, trade with Russia will “come to a complete standstill,” fears Uwe Fröhlich, co-head of DZ Bank. In fact, there are no more payment methods that are still available. A Kremlin spokesman himself calls it a “blow against the Russian economy”.
Withdrawal from Russia can cost billions
Energy companies in particular are withdrawing from Russia. Wintershall Dea wrote off its stake in Nord Stream 2 on Wednesday, put all new projects on hold and stopped payment transactions with Russia. The US oil company Exxon Mobil had previously announced that it would gradually withdraw from the operation of a large oil field in Russia. Italy’s state-owned oil producer Eni announced it was selling its stake in the Gazprom-operated Blue Stream pipeline.
The withdrawal from Russia sometimes costs companies billions. That could be one reason why the French group Total is taking a middle ground. Although the company no longer wants to provide capital for new projects in Russia, it does not want to withdraw completely either.
In the automotive industry, Ford has withdrawn from Russia for the time being. The US automaker justified its decision with “deep concerns about the Russian invasion”. At the beginning of the week, the Swedish commercial vehicle manufacturer Volvo stopped production and sales in Russia. Renault also temporarily shut down production at its plant near Moscow on Monday.
The list of corporations that are restricting or ending their business with the country is getting longer and longer.
(Photo: imago images/ITAR-TASS)
Against the background of the sanctions, Bosch has partially interrupted its deliveries to Russia. The supplier does not accept any new orders in the local plants, a spokeswoman said on request. Even trade fair companies that are in public hands are suspending their business in Russia – such as Messe Düsseldorf. The step is likely to hit the company hard because many trade fairs were possible in Russia despite Corona. And Messe Frankfurt is suspending its 20 events planned in Russia for the time being.
On Wednesday, the Swiss logistics giant Kuehne + Nagel also announced that it would largely stop its business in Russia. The group only wants to deliver freight for medicines and other relief supplies to the region. The Deutsche Post subsidiary DHL no longer transports shipments to Russia, and the Danish shipping company Maersk has suspended container shipping to and from Russia.
Deliveries to Russia suspended
Many companies have stopped supplying the Russian market, such as the Playmobil manufacturer Horst Brandstätter. The Franconian company wanted to make ten million euros in sales this year in Russia. And iPhone manufacturer Apple is suspending sales in Russia and restricting the payment service Apple Pay.
Aircraft makers Airbus and Boeing are stopping deliveries to Russian airlines. The airlines will no longer receive spare parts and will no longer receive technical support. Sporting goods manufacturers also announced consequences: Adidas no longer supplies the Russian Football Association with jerseys, Puma no longer supplies the Russian Basketball Association.
More on companies and their relations with Russia:
But not all companies want to withdraw from the largest country in the world in terms of area. The wholesale group Metro, which generates a tenth of its group sales in Russia with its 93 stores, wants to stay. “We also feel a responsibility to our more than 10,000 employees in Russia, who bear no personal responsibility for the aggression against Ukraine,” a Metro spokesman said. Gypsum manufacturer Knauf and Persil producer Henkel made similar statements. Knauf employs 4,000 in Russia and Henkel 2,500.
Rödl & Partner lawyer Knaul reports that many of his clients are refraining from a hasty exit “in view of the importance of the Russian market”. Most tried to find suitable solutions to adapt their businesses to the new political and legal conditions. But that might not work for everyone. For many, the only option left is to get out of Russia.
Collaboration: Jakob Blume, Mathias Brüggmann, Axel Höpner, Katrin Terpitz, Christian Wermke
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