Despite widespread anger over Moscow’s war in Ukraine, few Western companies have left Russia, according to a Swiss study.
Researchers at the University of St. Gallen and at the IMD institute in Lausanne have delved into how many companies based in the European Union and in the G7 countries have actually divested from Russia since the full-scale invasion of Ukraine since last February.
The findings reveal “a limited withdrawal of EU and G7 companies from Russia, (and) challenge the narrative that there is an exodus of many Western companies leaving the market,” the University of St. Gallen in a statement Thursday.
“In fact, many companies headquartered in the country have resisted pressure from the government, media, and NGOs to leave Russia since the invasion of Ukraine.”
Only 120 companies left Russia
The study, published last month by the Social Science Research Network (SSRN) online – the publisher of “pre-print” studies that are not peer-reviewed – shows that only less than 10 percent of EU and G7 companies are with Russia. the subsidiary has been divested.
When Moscow launched its invasion, 1,404 companies based in the EU and the G7 counted a total of 2,405 active subsidiaries in Russia, the study showed.
By the end of November, only 120, or about 8.5 percent of these companies, had eliminated at least one subsidiary in Russia, study authors Niccolo Pisani and Simon Evenett found.
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There are more confirmed exits by companies headquartered in the United States than those based in Europe and Japan.
But even in the United States, less than 18 percent of U.S. subsidiaries operating in Russia have been completely liquidated since the invasion began, the study showed.
By contrast, 15 percent of Japanese companies and only 8.3 percent of EU companies have divested from Russia, he said.
Of those who have left Russian subsidiaries, 19.5 percent are German and 12.4 percent are US owned, according to the study.
Lower benefits and larger workforce
The study also shows that the exiting Western companies account for only 6.5 percent of the total pre-tax profits of EU and G7 companies with active commercial operations in Russia.
Meanwhile, 15.3 percent of the company’s total employees work in Russia.
This shows that, on average, exiting companies tend to have lower profits and a larger workforce than companies that remain in Russia, the study said.
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The findings, the university said, “reveal the willingness of Western companies to eliminate economies that are now considered geopolitical rivals.”