As the conflict in Ukraine continues, many Western companies have exited the Russian market in response to international sanctions and mounting pressure. Starbucks and McDonald’s are notable examples of firms that have withdrawn, yet some Western brands have chosen to remain in Russia, navigating the complexities of operating amidst ongoing sanctions.
The Russian invasion of Ukraine prompted a significant exodus of multinationals, concerned about potential backlash and reputational damage. Despite these concerns, over 2,000 foreign firms continue to operate in Russia, according to the Kyiv School of Economics. This number contrasts with approximately 1,750 companies that have either scaled back their operations or exited entirely.
The decision to stay has become increasingly challenging and costly. The Kremlin has implemented measures to deter companies from leaving, including requiring foreign businesses to sell their assets at substantial discounts—often around 50%—and imposing a 15% exit tax, which applies only if a local buyer is approved. These barriers are part of the Kremlin’s broader strategy to demonstrate that Russia can withstand Western sanctions.
Chris Weafer, an investment strategist with extensive experience in Russia, notes that the rising costs and bureaucratic hurdles have led some companies to reconsider their exit plans. “There is a sense that maybe it is too late to leave,” Weafer told Sky News. “Most companies that are still here have the attitude of let’s keep our head down and hope conditions change and we won’t have to leave.”
Unilever, a global consumer goods giant, continues its operations in Russia despite scaling back its business. The company still manufactures popular products like Cornettos and Magnums for the Russian market. Unilever has stated that it remains in Russia to support its local employees and has concerns about potential asset appropriation by the state. The company has minimized its economic contribution to the Russian state while exploring its options for future actions.
Burger King, which initially pledged to exit Russia, remains operational under its franchise model. The structure of its ownership has complicated the exit process, leading to its continued presence in Moscow.
Critics argue that Western companies still operating in Russia are indirectly supporting the Russian economy. Mark Dixon, founder of The Moral Rating Agency, expressed strong disapproval, stating, “These Western companies that are still doing business in Russia don’t have a moral bone in their body.”
As the situation evolves, these companies face increasing scrutiny and pressure from both the public and advocacy groups. The ongoing conflict and the complex landscape of international business continue to shape the decisions of Western firms operating in Russia.