Despite widespread anger over Moscow’s war in Ukraine, only a handful of Western companies have left Russia, according to a Swiss study.
Researchers at the University of St. Gallen and the IMD Institute in Lausanne looked at how many companies based in the European Union and G7 countries have already withdrawn from Russia since its all-out invasion of Ukraine last February.
Their findings reveal “a very limited decline of EU and G7 firms from Russia, (and) challenge the narrative that there is a significant exodus of Western firms leaving the market,” St Gallen said in a statement on Thursday.
“In fact, many companies based in these countries have resisted pressure from governments, the 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 Online (SSRN) — a publisher of peer-reviewed scientific “preprint” studies — showed that just under 10 percent of EU and G7 companies have ties Russian subsidiaries divested.
The study showed that when Moscow launched its invasion, 1,404 companies based in the European Union and the G7 counted a total of 2,405 subsidiaries that were active in Russia.
Study authors Niccolo Pisani and Simon Evenett found that by late November, only 120 companies, or about 8.5 percent of those companies, had liquidated from at least one subsidiary in Russia.
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There have been more confirmed exits by companies headquartered in the US than by those in Europe and Japan.
Even with the US, the study showed, less than 18 percent of US subsidiaries operating in Russia have been completely withdrawn since the invasion began.
By contrast, she said, 15 percent of Japanese companies and only 8.3 percent of EU companies have withdrawn from Russia.
Of those who left their Russian subsidiaries in place, 19.5 percent are German and 12.4 percent are US-owned, according to the study.
Lower profitability and a larger workforce
The research also showed that exiting Western firms account for only 6.5 percent of total pre-tax profits for EU and G7 companies with active business operations in Russia.
Meanwhile, they accounted for 15.3 percent of the total number of employees employed in such enterprises in Russia.
This, the study said, suggests that, on average, companies exiting tend to have lower profitability and a larger workforce than companies that remain in Russia.
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The university’s statement said that these findings “raise questions about the desire of Western companies to disengage from economies whose governments now view them as geopolitical competition.”