These companies continue to do business in Russia

The list of companies that continue to operate in Russia decreases minute by minutebut dozens of companies, including multinational manufacturers and hotel chains, are still doing business in the country despite intense public pressure for it to back down from its invasion of Ukraine.

McDonald’s was among the major companies to announce this week that it temporarily close its 850 restaurants in Russia. Cola-Cola and PepsiCo quickly followed suit, as are restaurant chains Burger King, Papa John’s, Little Caesars and others. Deutsche Bank announced on March 11 that it was “terminating” its activities in Russia. The German financial giant had come under fire for initially saying it intended to continue some of its business in the country.

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

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

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

The purpose of calling the companies is to pressure them to work in concert with the US government and its allies who 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 cripple an economy as intended,” he said.

For example, from the 1980s, the combination of economic sanctions and a widespread withdrawal of business from South Africa, led by General Motors, helped undermine the country’s apartheid system of institutionalized racial segregation, Sonnenfeld said. He also said he’s heard CEOs frustrated with boards “caught in a mental distortion of the 1990s, where we thought, ‘Well, we’re going to have to find some common ground here. “”

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

Companies that express “humanitarian concerns for all Russian citizens” miss the mark of sanctions, which only succeed when the “tyrant is no longer a successful totalitarian”, Sonnenfeld added.

Always there, doing business

Major companies choosing to maintain their presence in Russia include Illinois Abbott Laboratories. Among companies condemning the war, Abbott said on March 4 that it would donate $2 million to humanitarian groups providing relief in Ukraine. The multinational medical device and healthcare 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, generating approximately $200 million in revenue for the company which follows a multi-level marketing business model. Amway, based in Ada, Michigan, said it was “saddened by the war and devastation in Ukraine” in a March 4 statement.

There are 21 franchisees owned and operated Dunkin’ Donuts in Russia, where the Canton, Mass.-based coffee and sweets brand back in 2010 after 11 years away. The company told Yahoo Finance on March 11 that it had halted all “ongoing development and investment” in Russia, while noting that it could not legally shut down independently operated franchises.

Also on Sonnenfeld’s list is the Tokyo-based tire and rubber products producer Bridgestone tire. It operates manufacturing plants in Russia, but the extent of its operations in the country is unclear.

Cargill reduced its business activities and ceased its investments in Russia, the American agricultural giant said on March 11, but continues to offer what it called “essential food and feed facilities” there. “This region plays an important role in our global food system and is a critical source of key ingredients in staples like bread, infant formula and cereals,” the company said.

Cargill derives $1.1 billion in revenue from Russia, where it has 2,500 employees, according to Sonnenfeld. Cargill called the $1.1 billion figure inaccurate, but a spokesperson said in an email that the company does not disclose financial information nationally.

Citigroup is continuing its previously announced exit from its consumer banking business in Russia, the New York-based banking giant said on March 9. “As we work towards this release, we are operating this business on a more limited basis given the current circumstances and obligations. ”

This includes helping corporate customers in Russia, including many U.S. and European multinationals, as they suspend or resolve operations, Citi said. “With the Russian economy becoming disconnected from the global financial system following the invasion, we continue to assess our operations in the country.”

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

General Mills – the Minneapolis-based maker of Cheerios and other packaged foods – has a joint venture with Nestle 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 of $18.1 billion in 2021.

CPW has suspended capital investments in Russia and “we will continue to be in close communication with Nestlé as the situation evolves,” a General Mills spokesperson emailed 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 there. “As a food company and employer, we also have a responsibility to the Russian people and our more than 7,000 employees, most of whom are locals,” the world’s largest food company said in a statement.

Oil service company Halliburton derives up to 2% of its revenue from Russia, according to a JP Morgan estimate cited by Bloomberg News. The company reported total revenue of $15.3 billion for 2021.

Multilevel Marketing Company HerbalifeNutrition derives 2.7% of its revenue from Russia and Ukraine.

Hotel chain Hyatt on March 9, it announced that it was suspending development activities and new investments in Russia and that it would “continue to evaluate hotel operations in Russia.” Hyatt, in a March 4 statement, said it was “heartbroken by the devastation” in Ukraine and had established a relief fund for colleagues in the region in need of basic necessities and relocation assistance. . Hyatt still operates six locations in Russia, according to Sonnenfeld.

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

Chicago-based global advertising agency Leo Burnet has an office in Moscow and counts among its Russian customers the Russian digital service provider Rostelcom.

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

Yet being among the listed outliers has social media calling for boycott the metro and others on it.

“The Russian invasion of Ukraine highlighted the intersection of risk, reputation and revenue,” said Paul Washington, executive director of the Conference Board’s ESG Center, in a report. “For many companies, the decision to suspend relations can be relatively easy. Given the size of the Russian economy, little revenue may be involved. And the reputational damage of continuing business – and the advantage of announcing a withdrawal – can be significant.”

Crypto’s unified front?

Some cryptocurrency companies also resist pressure to close Russian accounts, despite a February 27 appeal of Ukrainian Deputy Prime Minister “calling on all major crypto exchanges to block addresses of Russian users”.

kraken CEO Jesse Power replied that “despite his deep respect for the Ukrainian people,” his company would not freeze Russian customer accounts unless legally required to do so.

The largest cryptocurrency exchange in the world, Binance, blocks accounts of Russians on Western economic sanctions lists, but not Russians in general. “We are not going to unilaterally freeze the accounts of millions of innocent users,” CEO Changpeng Zhao wrote in a March 4 blog post.

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

Coinbase’s stance aligns with those taken by other crypto exchanges, including Kraken, KuCoin, and Coinberry.

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