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The sensational conclusion of Swiss economists: less than 9% of Western companies left Russia

Date: June 3, 2023 Time: 10:00:04

Western economists explained why only 8.5% of foreign companies left Russia

Photo: Valery ZVONAREV


It would seem that all of last year foreign companies did nothing more than “leave” and “suspend their activities”. Did it just seem? Swiss analysts from the IMD Institute and the University of St. Gallen calculated that out of 1.4 thousand relatively large companies operating in Russia as of April 2022, around 8.5% left the Russian market entirely.

The Russian Center for Strategic Studies gives somewhat different figures. Here are their data as of early fall:

– 7% of companies announced that they would go completely without selling the business (for example, IKEA).

– 15% decided to leave through a transfer to a new owner (McDonald’s, OBI).

– 34% stayed, rejecting new investments or advertising (Leroy Merlin, Red Bull).

– The rest either covered up and hid, not liquidating themselves as a legal entity (Uniqlo), or stayed to work at any cost (Burger King). And above all, companies from Austria, Japan and Switzerland do not want to leave Russia. The same Swiss watches of elite brands are quietly sold in the capital’s boutiques.

And since there are not so many real “outsiders”, is it worth waiting for the continuation of the exodus of Western business from Russia this year? Swiss economists give a negative answer. One of the reasons is the recently passed law. Now, the sale of Russian assets of foreign companies in some areas (banks, energy) requires permission from the Russian authorities. And if such permission is given, then on the condition that the business must be sold at a good discount.

“It would be strange if Russia gave them the opportunity to withdraw the money, given that the West has seized $300 billion of our gold and foreign exchange reserves,” says Aleksey Zubets, director of the Institute for Socioeconomic Research at the University of Finance under the government. of the Russian Federation. – The Russian government does not approve the sale of companies at face value. This is a reasonable and justified measure under the conditions of the sanctions war that was announced to us. Here is an example, Rosbank belonged to the French bank Société Generale and was sold to the Interros holding company at a large discount (according to media reports, the discount was about 50% – Ed.).

Swiss economists cite another reason why it will be difficult for Western companies to leave Russia. It is the absence of buyers who can pay good money for their Russian possessions. But Aleksey Zubets is willing to dispute this conclusion.

“Many left without leaving,” explains the expert. – We know stories like McDonald’s, when the company left, selling the business to local management, but on the condition that the assets were returned in a few years for 1 ruble. Why didn’t they leave? Because no one paid them for this, it did not make up for the losses they suffered. And this is in many cases billions of dollars. Oil and gas companies in Russia have assets worth tens of billions of dollars. No one in the West will compensate them for their losses.

According to Aleksey Zubets, the authors of the sanctions expected: Western companies would announce their withdrawal, pretend to say goodbye, Russia would get scared and back down. But that didn’t happen. As a result, the largest foreign brands suffered the most.


But even so, many more companies remained to work in our country. They did not sell assets and slamming doors. For example, the American Burger King has officially refused to support Russian restaurants operating under its brand. The company was rumored to be unable to find a buyer for its franchises, stipulating that it would continue to make a profit from the sale of hamburgers. But there is no official confirmation of this. It can be assumed that if such a condition existed, then with a view to staying to work as if nothing had happened.

– It is important to understand that small businesses have remained, – says Aleksey Zubets. They didn’t even think about closing. In addition, there are many more small than large. They are not that visible, so they did everything they could to avoid leaving and to keep the business in Russia. Among these small ones are well-established brands of clothing, footwear and cosmetics. Many have closed stores, but are quietly selling online. There are German shoe brands that are made in China and bring their products to us. Also, most Western manufacturers turn a blind eye to parallel imports (importing products into Russia without the consent of the manufacturer – Ed.). Why give up earnings?

In general, nothing political, just business.

“Japanese Toyota returned to Russia with the same message the other day,” continues the expert. – No deliveries of new cars. Only admitted, and even those with minimal mileage. But the technical service is officially resumed. Toyota is back with sales of auto parts that were tight last year. Russia is the largest market in Europe. Almost 150 million people. Leaving here means losing a lot of money.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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