Status: 03/03/2022 5:29 p.m
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The pressure on Western companies has increased enormously because of the sanctions. Many part with their Russian business. Forever – or do you keep the door open?
By Bianca von der Au, ARD stock exchange editors
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Yesterday, the Volkswagen Group wanted to keep its factory in Kaluga, Russia, with around 4,000 employees open. Today, the message suddenly came from Wolfsburg: Against the background of the Russian attack, the production of vehicles in Russia would be stopped until further notice.
The moral pressure on companies doing business in Russia is enormous, says trade researcher Alexander Sandkamp from the Kiel Institute for the World Economy. “How things continue now will also depend on how this conflict develops,” said Sandkamp. Some of the companies are even withdrawing voluntarily from Russia. “It will also depend on whether even tougher sanctions, including trade embargoes, are imposed by the EU.”
List of companies is getting longer and longer
There are already reports almost daily from companies withdrawing from business in Russia or at least stopping new business. In addition to VW, these included other big names from the DAX such as Mercedes Benz, BMW, SAP and the turbine manufacturer Siemens Energy. A statement from the company states:
Siemens Energy supports the stance of the international governing coalition that has imposed sanctions on Russia. As we continue to assess the extensive sanctions and their impact on our business, we have halted all new business in Russia.
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After 165 years of partnership with Russia, the Siemens parent company has also put all new business on hold for the time being. However, this does not affect current business. A spokesman said that ARD stock exchange studio, one feels responsible towards the employees. In addition, one is contractually bound and certain maintenance work is simply relevant to safety – for example on trains. Siemens’ involvement in Russia accounts for less than one percent of sales.
Only a minority go forever
Things are different at Henkel. The Persil manufacturer employs 2,500 people at eleven production sites and makes a good five percent of its sales in Russia. Henkel initially intends to continue with its business in Russia; Here, too, one refers to the responsibility towards the employees on site. Even many medium-sized companies that are represented in Russia cannot simply close the factory gate and throw away the key.
“People are thinking more about how to shut down operations in a controlled manner. That you don’t lose the employees, the brand image and the reputation,” says Russia expert Andreas Knaul from the large law firm Rödl & Partner. “There may also be isolated companies that say: ‘I’m leaving, I never intend to set foot in Russia again’. But that’s definitely the extreme minority among German companies.”
Since the annexation of Crimea by Russia in 2014, almost half of the German companies active there have withdrawn. According to the DIHK, 3,600 German companies currently have a branch in Russia.
A question of morals
What’s more, after the most recent sanctions as a result of the war of aggression against Ukraine, the Kremlin is now targeting foreign companies in its own country. “A specific measure is that foreign subsidiaries have been obliged to convert 80 percent of their foreign exchange earnings into rubles with retrospective effect from January 1 of this year,” says legal expert Knaul from Rödl & Partner. So in a currency that is in free fall.
And so it is currently also economically questionable whether a commitment in Russia is still worthwhile. For most companies, however, the moral question should be at the top of the list. The President of the Federation of German Industries, Siegfried Russwurm, has made the attitude of many responsible persons with regard to Russia clear. The opinion prevails: You can no longer do business with this regime.
Separation from Russia – More and more companies are saying goodbye
3/3/2022 4:11 p.m
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