Multinationals Continuing Sales In Russia Under Mounting Pressure To Take Stronger Action

Topline

Many multinational companies have distanced themselves from Russia following its invasion of Ukraine, but those continuing to do business in the country are increasingly facing a backlash on social media.

Key Facts

Nestle, which generated 2% of its total sales in Russia last year, is under mounting pressure after Ukrainian Prime Minister Denys Shmyhal criticized the world’s biggest packaged foods maker on Twitter for showing no signs of withdrawing from the Russian market, drawing calls for a boycott of Nestle products.

Papa John’s, which announced last week it had suspended corporate operations in Russia, has drawn ire from social media users following an interview Christopher Wynne, an American franchisee in Russia gave to the New York Times in which he said he planned to keep his restaurants open.

Burger King owner Restaurant Brands International’s President David Shear said in an open letter Thursday that the company has started to take steps to divest its 15% stake in its joint venture in Russia, a week after the burger chain suspended corporate support there.

Koch Industries—which Forbes ranks as the second-largest private company in the United States—said in a statement Wednesday that its Guardian Industries will continue to operate two glass manufacturing facilities in Russia that employ around 600 people.

A Nestle spokesperson on Friday repeated its previous statement that the company has halted all advertisements and capital investment in Russia and suspended shipments of nonessential products to and from Russia.

Forbes has reached out to Wynne for comment.

Chief Critic

“If you have companies in your districts who financed the Russian military machine…You should put pressure,” Ukrainian President Volodymyr Zelensky said during his address to U.S. Congress on Wednesday. “I am asking to make sure that the Russians do not receive a single penny that they use to destroy people in Ukraine.”

Key Background

In a separate address Tuesday, Zelensky named several international companies that hadn’t left Russia, including South Korean electronics giant Samsung Electronics, American drug maker Johnson & Johnson and German chemical giant BASF. The three have scaled back their businesses in Russia since its invasion of Ukraine but have continued sales. For some companies whose Russian businesses are overseen by franchisees, leaving the Russian market or halting sales altogether may not be an option unlike companies that own businesses there. Russia’s Economy Ministry has proposed a policy in which Russian courts could appoint external managers to companies that suspend operations there and are more than 25% foreign-owned, and their shares could be frozen by courts, Bloomberg reported.

Further Reading

Ukraine’s Zelensky Urges Global Businesses to Exit Russia in Speech to Congress (Wall Street Journal)

Russia Devises Plan to Seize Firms Abandoned in Foreigner Exodus (Bloomberg)

Source: https://www.forbes.com/sites/lisakim/2022/03/18/multinationals-continuing-sales-in-russia-under-mounting-pressure-to-take-stronger-action/