These companies continue to do business in Russia

The list of companies that continue to operate in Russia is decreasing per minuteBut dozens of corporations, including multinational manufacturers and hotel chains, continue to do business in the country despite intense public pressure to withdraw from their invasion of Ukraine.

McDonald’s was one of the big companies that announced last week that it would temporarily closes its 850 restaurants in Russia. Cola-Cola and PepsiCo quickly followed the same, as well as Burger King, Papa John’s, Little Caesars and other restaurant chains. On March 11, Deutsche Bank announced that it was “slowing down” its business in Russia. The German financial giant had set fire to initially saying it intended to continue some of its activities in the country.

Decisions to withdraw or suspend operations come amid warnings from Russian prosecutors that existing companies could see their assets seized and government-critical CEOs could be arrested, the Wall Street Journal reported, citing people familiar with the matter.

Caterpillar cited “supply chain disruptions and sanctions” for its March 9 decision to suspend operations at its Russian manufacturing facilities. “We recognize that this is a time of incredible uncertainty for our esteemed employees and we will continue to look for ways to support them,” said the construction and mining equipment manufacturer.

The Peoria, Illinois-based company opened its first office in Russia in 1973 and has a parts distribution facility in Moscow and a manufacturing plant in Tosno, near St. Petersburg. Russia accounts for 8 percent of Caterpillar’s annual revenue, or about $ 4 billion, according to Yale University Management Professor Jeffrey Sonnenfeld.

More than 30 large companies “remain in Russia with significant exposure,” according to a daily updated count by Sonnenfeld and his team.

The goal is to pressure companies to work with the U.S. government and its allies, which have imposed economic sanctions on Russia, Sonnenfeld told CBS News. Government sanctions “rarely succeed completely on their own; they need fairly universal support from the business community to really paralyze an economy as intended,” he said.

For example, from the 1980s onwards, the combination of economic sanctions and a widespread withdrawal of South African companies, led by General Motors, helped undermine the country’s apartheid system of institutionalized racial segregation. dir Sonnenfeld. He also said he has been listening to CEOs frustrated with the boards “trapped in a mental deformity of the ’90s, where we thought,’ Well, we’re going to have to find a middle ground here. ‘

“There is no middle ground here,” the professor said of Russia’s war in Ukraine.

Companies that express “humanitarian concerns for Russian citizens in general” are losing their sense of sanctions, which only succeed when the “tyrant is no longer a successful totalitarian,” Sonnenfeld added.

Still there, doing business

Large companies that choose to maintain their presence in Russia include Illinois Abbott Labs. Among the companies condemning the war, Abbott said on March 4 that he would give $ 2 million to humanitarian groups offering aid to Ukraine. The multinational medical device and health care company did not mention Russia or its operations in the country in its statement.

Direct selling giant Amway employs at least 500 people in Russia, which generates about $ 200 million in revenue for the company that follows a multilevel marketing business model. Ama, based in Ada, Michigan, said she was “saddened by the war and devastation in Ukraine” in a statement issued on March 4.

There are 21 franchisees and managed Dunkin Donuts in Russia, where the coffee and candy brand is based in Canton, Massachusetts returned in 2010 after an 11-year absence. The company told Yahoo Finance on March 11 that it had stopped all “current development and investment” in Russia, although it noted that it could not legally close independently operated franchises.

Also on the Sonnenfeld list is a tire and rubber producer based in Tokyo. Bridgestone tire. He runs manufacturing plants in Russia, but the scope of his business in the country is unclear.

Cargill it is downsizing business and has halted investment in Russia, the U.S. agricultural giant said on March 11, but continues to offer what it called “essential food and feed facilities.” “This region plays an important role in our global food system and is a critical source of key ingredients in basic commodities such as bread, infant formula and cereals,” the company said.

Cargill earns $ 1.1 billion in revenue from Russia, where it has 2,500 employees, according to Sonnenfeld. Cargill described the $ 1.1 billion figure as inaccurate, but a spokesman said in an email that the company does not disclose financial information at the country level.

Citigroup is expanding its previously announced exit from its consumer banking business in Russia “to include other lines of business and continue to reduce our remaining operations and exposure,” the New York-based banking giant said on March 14th. “Due to the nature of banking and financial services operations, this decision will take time to execute.” Citi said it would no longer apply for new businesses or customers, as it offers assistance to multinational corporations developing their businesses in Russia.

Citi has $ 9.8 billion in domestic and cross-border exposure in Russia, according to a Feb. 28 regulatory filing. That’s a much bigger stake than Wall Street rivals like Goldman Sachs and JPMorgan Chase, both of whom announced their withdrawal from Russia on March 10th.

General Mills – the manufacturer of Cheerios and other packaged foods based in Minneapolis – has a joint venture with Nestlé called Cereal Partners Worldwide, or CPW, which operates in Russia. CPW generated $ 118 million in sales for General Mills last year, less than 1% of the company’s total sales, which reached $ 18.1 billion in 2021.

CPW has suspended capital investment in Russia and “we will continue to work closely with Nestlé as the situation unfolds,” a General Mills spokesman emailed on March 10.

Nestlé said on March 9 that it had suspended capital investment and advertising in Russia, but would continue to sell “essential” food products in that country. “As a food company and entrepreneur, we also have a responsibility to the people of Russia and our more than 7,000 employees, most of whom are local,” the world’s largest food company said in a statement.

Oil field services company Halliburton it earns up to 2% of its revenue from Russia, according to a JP Morgan estimate quoted by Bloomberg News. The company had total revenue of $ 15.3 billion in 2021.

Multilevel marketing company Herbalife Nutrition it gets 2.7% of its revenue from Russia and Ukraine.

Hotel chain Hyatt on March 9, he said he was suspending development activities and new investments in Russia and that he “will continue to evaluate hotel operations in Russia.” Hyatt said in a statement on March 4 that he was “saddened by the devastation” in Ukraine and that he had started a relief fund for colleagues in the region who needed needs and help with relocation. Hyatt still operates six locations in Russia, according to Sonnenfeld.

Koch Industries has numerous ongoing business operations in Russia and has given no indication of that change, Popular Information reported Monday. Its wholly-owned subsidiary, Guardian Industries, operates two glass production plans in Russia, one near the border with Ukraine, according to Judd Legum’s newsletter.

Koch Industries has two other subsidiaries with operations in Russia, including Molex, a manufacturer of electronic components, according to Popular Information. Koch-Glitsch operates as Koch Engineered Solutions, which maintains a sales office in Moscow.

Echoing this position, rival hotel operator Marriott on March 8 he updated his statement expressing concern over the humanitarian crisis in Ukraine and neighboring countries, saying he is working with charities to help. The international network has at least 10 locations in Russia.

Chicago-based global advertising agency Leo Burnett has an office in Moscow and its Russian clients include the Russian digital service provider Rostelcom.

Fast food giant Subway he said he would redirect the profits from his Russian operations to humanitarian efforts, noting that about 450 outlets in Russia are independently owned and controlled by local franchisees.

Still, being on the list atypical values ​​is provoking calls on social media boycott the subway and others about him.

“The Russian invasion of Ukraine has highlighted the intersection of risk, reputation and revenue,” Paul Washington, executive director of the Conference Board’s ESG Center, said in a report. “For many companies, the decision to suspend ties can be relatively easy. Given the size of the Russian economy, revenue may be scarce. And the damage to the reputation of business continuity, and the benefit of advertising a withdrawal can be important. “

The unified front of Crypto?

Some cryptocurrency companies they also withstand the pressure to close Russian accounts, despite a February 27 appeal of the Deputy Prime Minister of Ukraine “calling on all major cryptographic exchanges to block the addresses of Russian users.”

Kraken CEO Jesse Power responded by saying that “despite his deep respect for the Ukrainian people,” his company would not freeze the accounts of Russian customers unless it was legally required to do so.

The world’s largest cryptocurrency exchange, Binance, is blocking the accounts of Russians on Western economic sanctions lists, but not of Russians in general. “We will not unilaterally freeze millions of innocent user accounts,” CEO Changpeng Zhao wrote in a March 4 blog post.

Coinbase CEO Brain Armstrong tweeted on March 4 that “ordinary Russians are using cryptography as a lifeline.” However, the company would comply with any ban imposed by the US government, he added.

Coinbase’s position is in line with those adopted by other cryptocurrencies such as Kraken, KuCoin and Coinberry.

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