Western Companies Are Finding It Hard to Leave Russia Amid Increasing Kremlin-Imposed Exit Costs

By Jace Dela Cruz

May 28, 2024 08:51 AM EDT

Despite initial pledges to exit Russia following the 2022 invasion of Ukraine, many Western companies, including Avon Products, Air Liquide, and Reckitt, remain in the country.

According to the Financial Times, among hundreds of firms, these companies face complex bureaucratic challenges and a rebounding consumer market that complicates their departure plans. 

A picture taken on April 3, 2024 shows a view of the towers of the Moscow International Business Centre (Moskva City) in western Moscow.
(Photo : ALEXANDER NEMENOV/AFP via Getty Images)

Western Companies Remain in Russia

Western companies initially committed to reducing their presence in Russia as part of a broader strategy to weaken the country's economy. However, Moscow has steadily tightened exit requirements, mandating at least a 50% discount on foreign asset sales, and a minimum 15% exit tax.

Firms must also find Russian buyers not sanctioned in the West and suitable for Moscow. Air Liquide's attempt to sell its Russian operations to local managers was stalled due to a lack of government approval.

Avon started the sales process but eventually turned down the offers received as it emphasized its commitment to serving women globally. Reckitt, which announced a transition plan for its Russian business, has also adopted a more cautious approach as it faces bureaucratic hurdles.

READ NEXT: Russia's Vladimir Putin Visits China's Xi Jinping to Strengthen Economic, Political Ties Amid US Global Dominance 

Multinationals Continue its Operations in Russia

Multinationals like PepsiCo and Coca-Cola have found ways to continue their operations in Russia. PepsiCo maintains a dairy business employing thousands of people, while Coca-Cola's regional bottler created a standalone company to produce local versions of its brands.  

READ MORE: Germany's Deutsche Bank, Commerzbank Assets Seized by Russian Court Over Gas Facility Construction Dispute

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