The situation of the Russo-Ukrainian war has become more and more intense, and with the implementation of sanctions against Russia by many European and American countries, the clouds of war have gradually drifted to the heads of multinational enterprises that have business in Russia - under the situation of the great power game, they have to make choices. From manufacturing to the energy industry to the IT industry, the giants have launched an unprecedented "evacuation" operation. In addition, there are a small number of companies that choose to hold the currency and wait and see, while silently praying that the sanctions will not have much impact on their operations.
Image from Yandex
The first to carry the flag of retreat were the energy companies, the most representative of which were undoubtedly BP and Shell.
BP announced on February 27 that it would withdraw its 19.75% stake in Rosneft and the joint venture; the Netherlands-based Shell also decided to withdraw from its joint venture with Gazprom, which also included its participation in the Nord Stream 2 gas pipeline project.
BP's long-standing presence in Russia's huge crude oil market has been investing in Russia since 1997 and officially entering the local market in 2003. At the time, it established a joint venture with TNK International, Russia's fourth-largest oil and gas company, and OAO Sidanko Oil, in which it had a stake, with BP contributing $6.75 billion.
To this day, the importance of the Russian market to BP remains undiminished, a BP spokesperson once said that Rosneft's oil and gas reserves account for the company's total reserves in general, while production accounts for one-third of the total production, the divestiture of shares to bring BP losses of up to 25 billion yuan - far more than its first investment in Russia that year.
Shell's presence in Russia has been even more tortuous, with its stronger operating style repeatedly drawing challenges since its first contract with Russia in 2003, with former Russian Minister of Natural Resources Trutnev publicly declaring in 2006 that Shell's Sakhalin 2 oil and gas project violated at least five Russian laws.
As Russia's attitude grew stronger, Shell eventually reduced its stake in Sakhalin 2 and instead focused on the Salym field and another exploration project in northern Siberia. Of course, the more decentralized layout also made Shell lose less in this withdrawal operation, and according to statistics, its interests in Russia are valued at about $3 billion.
In addition, energy giant ExxonMobil also plans to launch a Russian oil and gas business and stop new investments. According to its latest annual report in February, its Russian oil and gas business is already valued at more than $4 billion.
Immediately after the energy companies, a number of auto giants have also begun to pack their bags and prepare to evacuate. On February 28, Daimler Trucks, a unit of the Mercedes-Benz group, said it would suspend its operations in Russia, including a partnership with Russian manufacturer Kamaz. Daimler said it will no longer cooperate with Camas in the production of trucks or supply parts to the latter.
If you pull back eleven years, daimler at that time also saw Russia as one of the emerging markets to be explored, and Camas was also regarded as a close partner. In November 2009, Daimler Trucks and Camas jointly established two joint ventures – Fuso-Kamas Trucks and Mercedes-Benz Trucks Orient, each holding a 50% stake. In addition, Daimler has continued to increase its stake in Camas itself, which has reached 15% so far.
Now, daimler, faced with the reality of sanctions imposed by Germany and the European Union, has had to overturn the relationship that has been built for many years. According to the German Business Daily, Mercedes-Benz Group is studying the law of the sale of shares and plans to sell its shares in Camas as soon as possible.
Volvo Trucks, a Subsidiary of the Volvo Group, are also among those who have withdrawn from Russia. It set up its own truck plant in Russia in 2009, two in Kaluga Region and Greentown near Moscow, where volvo Group sales today account for about 3 percent of total sales.
Volvo said on Feb. 28 that it would terminate all production and sales operations in Russia. But a Volvo spokesperson also mentioned that Russian operations are only "suspended" until further notice.
On the other hand, companies in the supply chain of car companies do not seem to be in such a hurry to disconnect from the Russian market, such as Cummins, a U.S. truck engine manufacturer, which, like Daimler, has established a joint venture with Camas, Cummins Kama, and in previous years authorized the latter to use its engine emissions technology. In a recent interview with the media, Cummins did not explicitly express his intention to withdraw from the Russian market, but only declared that the situation in Russia and Ukraine would have a "certain impact" on local business.
Compared with real enterprises, the Internet and technology giants that control the global information flow are moving much faster.
As early as February 27, Facebook's parent company Mata restricted access to media such as Russia Today and Russia Satellite News Agency, and Google's YouTube not only banned the above two media accounts from publishing information to Europe, but also restricted Russian state media from placing ads on its platform. In addition, Microsoft and Twitter have announced or reiterated similar measures.
As one of the world's most important technology companies, Apple's side may have a greater impact on Russia. In a statement issued on March 1, Apple said it would suspend sales of its company's products in Russia and restrict payment functions, in addition, two major apps from Russia Today and Satellite News Agency were also removed from the App Store outside the Russian market. According to media reports, Russian users can still access Apple's online store at the moment, but cannot actually deliver any of the same products, whether it's an iPhone or an iPad.
Woody, an analyst at market research firm Strategy Analytics, said that other leading russian smartphone makers are likely to join Apple's actions in Russia within a few days, and if the current situation continues for a longer period of time, the local smartphone market may be seriously affected. Strategy Analytics expects Apple's sales in Russia to fall by 2-3 million this year.
In fact, if you put aside the business factor, the Internet technology giants in Silicon Valley may not have much good feelings for Russia, after all, they are often fined by the latter, although the amount is not large, but it also means that their laissez-faire approach is not popular with Russia.
According to preliminary statistics, Google has been fined several times in Russia for "failing to remove banned content", with a total fine of more than 60 million rubles (about $800,000), and it was fined 7.2 billion rubles (about $98 million) by a Moscow court last December, and Google has not yet decided to appeal.
According to Russia's Federal Agency for The Supervision of Communications, Information Technology and Mass Media (Roskomnadzor), as of the end of September 2021, Facebook's parent company Meta has been fined a total of 66 million rubles, while Twitter has also been fined 38.4 million rubles.
It is worth mentioning that even Apple, which has always been cautious, was fined 906 million rubles by the Russian Antitrust Agency (FAS) last April, after it rejected the application of Russian cybersecurity company Kaspersky and launched its own Screen Time function. FAS argues that Apple has abused its dominance in the app distribution market.
The Russian-Ukrainian crisis is still continuing, and as the geopolitical situation becomes increasingly tense, it is bound to have more companies "lose their pawns" and withdraw from Russia, a market that is no longer peaceful – even if some segments are still unquestionably blue oceans. For Local Russian companies, foreign investors and ordinary consumers, losing contact with each other is never a good thing. Zooming in to the world, if future sanctions and conflicts replace cooperation and win-win results as they do today, then the global economic system that countless companies have worked hard to build in the past few decades may be nothing more than a satirical joke.