Shaken by the war and slowed down by sanctions, more and more companies are shutting down their business in Russia. The retreat has been underway for some time.
No more iPhones for Russia, no BMW cars and no more Playmobil: More and more companies are taking a stand against the war in Ukraine. They stop or limit their Russia business. The deeper Russian troops penetrate into the neighboring country, the clearer it is that international companies are withdrawing from Russia.
“We condemn the aggression against Ukraine and are following developments with great concern and dismay,” BMW said. The head of the German-Russian Chamber of Commerce Abroad, Matthias Schepp, says: “Even for experienced and crisis-tested managers, the attack on Ukraine is a shock.”
The economist Lisandra Flach suspects that the largest disinvestment can be observed in such a short time. Is the world map of trade being redrawn?
In the opinion of the Committee on Eastern European Economic Relations, the war waged by Russian President Vladimir Putin puts German-Russian economic relations at risk. “The faster the Russian government stops this war, the more of these relationships can still be saved.”
New companies pull the plug on Russia every day, if only because of the sanctions. In the energy sector, certain goods are not allowed to enter Russia. There are also restrictions in other areas, such as aircraft parts and microchips.
And some Russian banks are banned from making payments in the Swift system. Trade with the country will come to a complete standstill, says Uwe Fröhlich, co-head of DZ Bank. “Because there are actually no more payment methods that are available.”
The Franconian company Horst Brandstätter actually wanted to make ten million euros in sales this year in Russia. Brandstätter is world famous for its Playmobil figures and also produces planters and watering systems. “We are stunned and dismayed by the invasion of Russian troops in Ukraine,” says CEO Steffen Höpfner, stopping deliveries to Russia.
With its Russian partner Avtotor, BMW built 12,000 cars in Kaliningrad (Königsberg) last year and sold a total of 49,000 cars in Russia. This is the end of it for the time being. “We condemn the aggression against Ukraine and are following developments with great concern and dismay,” said BMW.
Fewer Russian products on German shelves
More and more companies are putting up stop signs for their Russian business or parts of it: logisticians like Kuehne + Nagel and DHL, municipal companies like Messe Düsseldorf, the container shipping companies Maersk and MSC. Siemens is canceling its new business in Russia and stopping international deliveries to the country. MAN no longer supplies trucks and spare parts. There are fewer and fewer products from Russia on German supermarket shelves. Aldi even listed Russian vodka.
Russia’s share of sales is small for many German companies. According to the Federal Statistical Office, 2.3 percent of all foreign trade is accounted for by the largest country in the world in terms of area. Even a failure of all German-Russian trade would have manageable effects, says Veronika Grimm. According to this, it would cost Germany less than one percent of gross domestic product.
Because German companies have been withdrawing from Russia for a long time. According to the German-Russian Chamber of Commerce Abroad, 3,651 companies with German capital were still active there. In 2011 there were 6,300. The weakness of the Russian economy and sanctions as a result of the annexation of Crimea caused trade between the two countries to shrink. A publicly announced freeze on a deal with Russia – which is not particularly large and is made more difficult by sanctions – is often also a political commitment.
“On the one hand, companies have an eye on their image and have to reassess business with Russia,” says Lisandra Flach, the foreign trade expert at the Ifo Institute. “On the other hand, many companies assume that Russia will not be an attractive market in the future.”
US companies are also pulling the plug: Apple is no longer selling its cell phones, tablets and other products in Russia. The payment service Apple Pay and other services are also restricted. Apps from the Russian state media RT and Sputnik are no longer available in app stores outside of Russia.
The carmaker Ford is turning its back on Russia – after its presence had already been significantly reduced in recent years. The oil company Exxonmobil is also out. Shell and BP are getting out of the Russian energy companies Gazprom and Rosneft. The Austrian energy group OMV has given up a possible stake in a huge Gazprom gas field.
Impact in Russia
Kremlin spokesman Dmitry Peskov speaks of a blow to the Russian economy, but emphasizes: “It will remain standing.” Moscow repeatedly refers to the high reserves that are intended to absorb the entire crisis. The Kremlin is also prepared for higher unemployment.
The people of Russia are feeling the effects of the crisis. The prices are rising. “In the supermarkets, labels are re-glued because goods are becoming massively more expensive,” says the head of the German-Russian Chamber of Commerce Abroad, Matthias Schepp. “And many Russians are also quick to buy technology before prices rise and the ruble falls even further.”
In the Moscow luxury department store GUM, the employees cannot keep up with the new prices. They simply put notes everywhere that the prices shown in the jewelry department, for example, were no longer valid and had to be recalculated. “It’s hard to get cash. Our cash cards no longer work at many machines,” says Schepp.
Many companies are sticking to their Russian business, albeit under difficult conditions. Volkswagen, for example, is not currently considering withdrawing. Bayer intends to continue selling seeds, crop protection products and pharmaceuticals there. Letters and parcels can be sent to Russia with Deutsche Post/DHL. The agricultural technology manufacturer Claas wants to continue building combine harvesters and large tractors in Krasnodar. The wholesale chain Metro also remains.
The companies each emphasized the great importance of their products for the Russians. “We also feel a responsibility for our more than 10,000 employees in Russia, who bear no personal responsibility for the aggression against Ukraine,” says a Metro spokesman.
But the war accelerated the trend away from Russia. A realignment is in progress. Other markets are needed. Only a few hours before the invasion, Industry President Siegfried Russwurm turned his attention to North America. “A strong transatlantic partnership is more important than ever,” he said in his role as Chair of the Transatlantic Business Initiative. It’s not just about strengthening trade relations, “but to strengthen our ideas for successful economic activity worldwide compared to state-controlled, non-market strategies”. (dpa)