Unilever – Nestle – Philip Morris: Why are 2,100 Western multinational companies retreating from their plans to exit Russia?

With its conquest from Russia in Ukraine a lot Western multinational companies They hastened to leave Moscow. More than two years after the outbreak of war, many Western companies changed their plans and remained in Russia.

Groups such as Avon Products, Air Liquide and Reckitt remained despite initially saying they planned to leave Bureaucratic obstacles are increasing And the Consumer activity is recovering, according to the Financial Times. The cosmetics brand owned by Natura, the French industrial gas producer and the British conglomerate (which makes everything from painkillers to condoms) are among hundreds of Western groups remaining in the country after the all-out invasion in 2022.

“A lot of European companies found themselves in a really difficult situation. They said they were leaving. They were presented with a select group of buyers who were unacceptable “For them,” said an executive who works with Western companies in the country.

In total more than 2100 multinational companies It remained in Russia as of 2022, the Kyiv School of Economics found, compared to about 1,600 international companies that either left the market or reduced operations.

It is among more than 2,100 companies that have said they will stay in Russia, which include consumer groups Mondelez, Unilever, Nestlé, and Philip Morris – Some are becoming more open about their plans. This was recently stated by the CEO of Mondelez to the Financial Times. Investors don’t “care ethically” On whether groups are leaving the country.

Austria’s Raiffeisen International Bank also came under fire after a Financial Times report said dozens of job advertisements it published in Russia showed ambitious growth plans in the country, despite its pledge to exit the market.

A second official who works with Western companies in Russia said it had Noticeable change in climate. While companies that left in the first weeks after the invasion saw a moral imperative to do so, he said: “Today’s wave is more about: Do you really have to leave? Do you want to leave? Some of these companies have built four or five factories over the course of 30 years.” General. They won’t sell it at 90% off.».

Activist investor and Unilever board member Nelson Peltz told the Financial Times this year that he had put pressure on the consumer goods group, which had explored options to sell, not to exit.

“If we leave Russia, they will take our brands for themselves. I don’t think this is a good business,” Peltz said, noting that competitors like Procter & Gamble and Colgate-Palmolive have not left the country. “Why should we?”

More than half of foreign companies in Russia have remained there since the start of the war, and shortly after the 2022 invasion of Ukraine, dozens of such groups pledged to reduce their presence in Russia as the West sought to starve the country’s economy and the Kremlin’s military coffers. of foreign exchange.

But Moscow Gradual increase in the cost of corporate exitA mandatory 50% deduction was imposed on assets from “unfriendly” countries sold to Russian buyers and a minimum “exit tax” of 15%. It is also increasingly difficult to find local buyers acceptable to both the seller and Moscow and whose participation is not subject to Western sanctions.

Air Liquide announced in September 2022 that it had signed a memorandum of understanding to sell its Russian business to the group of local managers that manage it. However, deal It never received approval from the Russian governmentleaving the company in limbo.

Some companies no longer feel compelled to leave the country. Avon launched a sale process for its Russian business and received offers, however I decided not to accept them.

“For more than 135 years, Avon has supported women wherever they are in the world, regardless of race, ethnicity, age or religion,” the company said.

While Reckitt announced in April 2022 that it had “begun a process aimed at transferring ownership of its Russian business,” its new CEO, Chris Licht, took a more nuanced approach.

“We are still looking at options, but it is becoming more complicated,” he told the Financial Times last month. Multinational companies are aware of the adventures of Western companies such as Carlsberg and Danone Their assets were confiscated After announcing their plans to leave.

While Danone was eventually able to reach a deal to sell the assets at a significant discount,… Carlsberg remains under siege is in a protracted legal battle with Moscow and one of the brewery’s former top executives is in a Russian prison.

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