What did Western companies do in the face of sanctions imposed on Russia due to the invasion of Ukraine?

Paints, medicines, cosmetics, clothing and other products of Western brands are still available in Russian stores, albeit in a smaller range. The two and a half years that have passed since the beginning of the full occupation of Ukraine by Russian troops have greatly changed the retail landscape and the range of products available, but not all companies wanted to follow the sanctions regime.

Some declared this honestly and openly: AuchanHe motivated his decision by “humanitarian considerations” but has since “Aiding Russia’s military action in Ukraine“. Others said that they tried their best, but failed due to the difficult conditions of selling the business to Russian investors and franchisees. Others went further: Changing product names or supply routes and the opening of representative offices in third countries.

¿Tikkurila or Tikkivala?

So on September 24 was known The paints produced by the Finnish manufacturer Tikkurila in its factories in Russia, will be sold under the new brand name Tikkivala starts next year. This was announced by the Russian subsidiary of Tikkurila Ltd.

“I don’t care what name is written on the box,” says Muscovite Igor, who, together with his wife Irina, selected materials to renovate their apartment. – I liked both the quality and the colors. Sanctions? However Tikkurilasomehow it has stayed with us until now, right? “We hope nothing will change with the new name.”

There are not only ordinary consumers, but also Russian companies such as Finnish paint, including those related to the defense industry. Therefore, it is known that Tikkurila Oyj participated in the tender especially in 2024. supply your products to NPO AlmazIt is dedicated to the production of modern anti-aircraft defense systems.

The owner of American giant PPG Industries (PPG.N) Tikkurila Oyj has repeatedly stated that he is trying to exit Russia from June 2022.

One February statement, Tikkurila stated that it complied with all sanctions and that Tikkurila had no authority to influence the operational decisions of its Russian subsidiary. At the same time, the company did not publicly disclose the fact that sales revenue on the Russian market in 2023 will be 10.4 billion rubles, and net profit will be 3.4 billion rubles.

According to Ekaterina Balon, marketing and innovation director of Tikkurila Ltd., after the rebranding, St. Two paint and varnish production plants in St. Petersburg they will continue We produce products. It is not yet known to what extent quality will be maintained after the announced departure of the Finnish “boss” with the inevitable review of standards and control, as well as of raw material suppliers due to sanctions.

Another paint and varnish manufacturerDutch AkzoNobel, He also announced changes regarding doing business in Russiabut he didn’t leave.

“Following Russia’s large-scale invasion of Ukraine, AkzoNobel offered break ties With the Russian subsidiary… According to them, the rest of the Russian business would be managed locally.

But we actually found that the opposite was true: AkzoNobel’s business and profits in Russia increased after the invasion, in part because AkzoNobel continued to send money to Russia. Raw materials for facilities in Russia. They also continued to invest in the development and marketing of new products, even though after the occupation they said they would no longer do so,” says journalist Stefan Vermuelen research from the Netherlands.

The ‘Insider’ broadcast went further and states It is stated that many components of paint and varnish materials from Western manufacturers are “used by Russian security forces”, especially in the occupied Ukrainian territory.

Answering Euronews’ questions, AkzoNobel’s press relations officer, Dorinda Berkman, emphasized that the company “never announced that it would stop its activities in Russia, on the contrary, it reduced a significant part of its activities there.”

“As reflected in the pictures official statement“AkzoNobel complies with all applicable sanctions regimes,” Berkman added.

S.Many Western companies have undoubtedly been “caught between commercial interests and moral concerns” since the start of the war in Ukraine.says Stefan Vermeulen. “(AkzoNobel’s) business interest was to stay in Russia, because it was a very profitable subsidiary… However, public opinion in the Netherlands, as in other Western countries, wanted multinational companies to leave Russia because of the military offensive in Ukraine. AkzoNobel , has chosen to publicly declare that it is no longer very active in Russia and to protect its business interests in the country as privately as possible without violating sanctions. We see a similar division in other Western companies.

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So how are things in the Russian market?

according to oppression Russian by Vedomostitotal 9,600 Western companies left Russia The first eight months of 2022 and 2023. At the same time, the activities of residents of China and the CIS countries have also increased.

Like major local retailers MFK JamilCois purchasing assets and franchises following the decision of many companies to leave Russia. Brands New Balance, Lee, Timberland and DKNY they are sold in the lower country his management. In this situation, names have been changedPreferably to get closer to the past and at the same time they have to look for new contractors; most of the time they look at China and Turkey rather than Bangladesh and India. This explains why product prices are rising, as is the case with the new Motherbear brand that has emerged to replace the famous British children’s brand Mothercare. And children’s goods on Russian online shopping sites sold Under the Mothercare brand.

Opportunity to do business in Russia This is largely because companies are allowed to offer professional services to their Russian subsidiaries, but are prohibited from offering the same services to other companies. In December last year, the European Commission announced that this exemption would no longer be valid as of 2024. And the other day, on September 24, Brussels issued a directive to better control violators, following numerous reports and information about loopholes in circumventing the sanctions regime against Russia.

However ‘Finance TimesDavid Laurello, a partner at the law firm Covington & Burling, is quoted as saying “regulators and companies can better focus on countering Russia’s strategies to acquire prohibited goods (for war) and hide assets under sanctions.”

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But Europe also has big companies. Officially refused to stop doing business in RussiaDespite boycott calls and numerous media attacks.

While explaining its decision, especially the chemical-pharmaceutical giant Bayer confirms support for vital businesses in Russia and Belarus. He stated that he would not deny “essential medical and agricultural products to the civilian population” because this would “only multiply the impact of the ongoing war on human life.” This position was also reflected in: European Commission document a year ago.

French company Yves RocherOne of the first of its counterparts to enter the Russian market in the early 1990s, it did not close any of its stores here. Despite condemning the “invasion of Ukraine”, leaders Group Rocher “believes that its employees in Ukraine and Russia should not suffer the consequences of military and political decisions made by their leaders.” For this reason, Groupe Rocher decided not to give up its divisions in Russia, where it has existed for more than 30 years, by obtaining “permission from the French Treasury until September 2025”. Chief consultant Raphael Abensour commented: Commenting on the company’s policy. Spine ConsultancyRepresenting Groupe Rocher.

The choice between moral principles and profit Between sympathy for the average consumer and collective responsibility, all companies face sanctions. Some leave without leaving. The new European Commission will undoubtedly have something to do in the near future.

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