Big US companies are leaving Russia in droves amid Ukraine conflict

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Hundreds of major US companies have suspended operations in Russia, including iconic US brands such as McDonald’s, Coca-Cola and Disney, amid a corporate exodus from the country.

American companies have joined much of the international community in condemning the Russian president Vladimir PoutineVladimir Vladimirovich PutinRussia-American Charged With Acting Illegally As U.S. Defense And National Security Agent Overnight – More Aid Going To Ukraine Hoyer Says Ban On Russian gas is worth a MORE political costviolent invasion of Ukraine, while pledging to support the humanitarian effort.

These decisions have put pressure on the small number of American companies that have not yet moved away from Russia to follow in the footsteps of the big American brands.

“Right now, doing business with Russia is very expensive,” said Jim Angel, a professor at the Georgetown McDonough School of Business. “There are political costs, social costs and economic costs.”

Companies are weighing the reputational risk of continuing to do business with Moscow, while taking into account the challenge of transporting goods safely to the region and the financial complications resulting from the strict sanctions and export controls imposed on the Russia by the United States and its allies.

“It is extremely difficult to do business in rubles if you are a US company, given the various penalties involved,” Angel said. “You may not be able to obtain financing for your Russian operations or withdraw profits. Being able to transfer money is becoming so problematic that many companies are saying, “We can’t do business this way.” We are going to close.

Papa John’s, which was one of the last recalcitrants, suspended its commercial activities in Russia on Wednesday. Papa John’s has 186 franchise stores in Russia, representing 8% of its restaurants worldwide. The pizza chain is committed to donating food and making financial donations to help Ukrainian refugees.

On Wednesday, more than 300 companies partially or fully withdrew from Russia amid the invasion, according to a list compiled by Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management.

Of the US companies that have gone out of business, McDonald’s has one of the largest footprints. The fast-food giant employs 62,000 Russian workers in around 850 stores and derives 9% of its revenue from its locations in Russia and Ukraine, according to recent directions.

McDonald’s said on Tuesday it would continue to pay its employees their full wages while its stores are closed.

“The conflict in Ukraine and the humanitarian crisis in Europe have caused untold suffering to innocent people,” CEO Chris Kempczinski wrote in a letter to employees. “As a system, we join the world in condemning aggression and violence and praying for peace.”

The Coca-Cola Co. announced on Tuesday that it would end all business activities in Russia. Shortly thereafter, PepsiCo Inc. announced that it would suspend soft drink sales and capital investments in Russia. Coca-Cola derives 1-2% of its net operating revenue from Ukraine and Russia, while PepsiCo derives about 4% of its revenue from Russia.

PepsiCo added that it would support its 20,000 Russian workers and continue to sell products such as milk and baby food, reflecting a move by other consumer staples companies.

“The math to keep operating is different if you’re making essentials, which is why you see companies suspending production of certain items, but in some cases keeping critical products like baby formula, dairy or toilet paper,” said Katie Denis, vice president of communications at the Consumer Brands Association, which represents Coca-Cola, PepsiCo and other U.S. brands.

“You don’t want to penalize children or people who have no say in what’s going on by taking things away from them that they depend on,” she added.

Yale’s list names a few dozen companies that have yet to suspend operations in Russia. These companies, which include manufacturing giants such as 3M Co. and Caterpillar Inc., drew criticism from Twitter users this week for staying in Russia.

One of the biggest brands on the list is Mars Inc., the company behind M&Ms, Snickers and Skittles, which has invested around $2 billion in Russia. The company is donating $2 million for humanitarian efforts and suspending advertising and new investment in Russia and Belarus, but not closing its existing Russian factories.

“We join the world in supporting the innocent victims of this war and calling for an immediate peaceful resolution,” Mars CEO Grant Reid said in a statement earlier this month.

Chemical company Dow Inc., another company on Yale’s list, said it was halting all investment in Russia and only supplying essential products, such as food packaging, hygiene and cleaning products. It also supports its employees in the region and donates $275,000 in humanitarian aid to Ukrainian refugees.

“Dow stands in solidarity with the people of Ukraine and denounces Russia’s invasion of Ukraine,” Dow spokesman Kyle Bandlow said in a statement.

The National Manufacturers Association, which represents Boeing Co., ExxonMobil and other companies that have had to cut ties with Russian suppliers, expressed support for sanctions against Russia this week and called on the country to step down. of the World Trade Organization.

“The free world must unite to speak out against unprovoked Russian aggression, save lives, and end the humanitarian crisis unfolding before our eyes,” Jay Timmons, president of the group, said in a statement. “Ending conflict is also essential to protecting livelihoods in America and around the world. Manufacturers are already feeling the severe economic disruption, which is putting the jobs of American manufacturing workers at risk. »

Most tech companies, including Microsoft, Google, Netflix, Nvidia, Oracle, VMWare and SAP, among others, have also suspended all or most of their operations in Russia.

American companies highlighted their efforts to suppress Russian propaganda and provide financial support to Ukrainian refugees. The U.S. Chamber of Commerce, the nation’s largest business lobby group, said Wednesday that companies have so far donated $127 million to humanitarian efforts.

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