French brands refuse to leave Russia: the situation was explained in three questions

There is increasing pressure on French companies still present in Russia. Before the war in Ukraine, they were estimated at 500, but today attention is focused on only a few of them. Decathlon, TotalEnergies and, above all, Renault, Auchan and Leroy Merlin, allocated by Volodymyr Zelensky before the Verkhovna Rada.

What are they accused of?

In a speech to French MPs and senators on Wednesday, the Ukrainian president accused the three companies of being “sponsors of the Russian military machine” and “financing the killing of children and women, rape, theft and looting.” He urged them to leave the Russian market, insisting that “values ​​are more important than profit.”

Clashing with parliamentarians, Volodymyr Zelenskyy calls for French help and the withdrawal of French companies from Russia (March 23, 2022)

On Monday, it was employees of the Ukrainian branch of Leroy Merlin who demanded it through an online petition (more than 15,500 signatures so far) after a Kiev store bombing that reportedly killed eight people. (see MO tweet below). They consider the company “one of the ten largest contributors to the state budget of Russia.” It has one hundred points of sale in the country and generates 18% of its turnover there.

Why is it not so easy to leave the country?

France is the first foreign employer in Russia with 160,000 employees, according to the Ministry of Economy. “Companies do not enter or exit the country in this way. This is part of a strategy implemented over the years,” explains Michel Noiry, strategy and finance consultant.

Without obligations. French companies not affected by the restrictions have a choice whether to leave Russia or not, Emmanuel Macron confirmed. But the president wants those who work “in sectors under sanctions and with partners under sanctions to respect the decisions and actions of France.”

This international investment specialist distinguishes between two situations. “There are purely export companies that sell to Russia through a distribution network. For them, often small ones, this can be done without much damage. Another case, much more impressive and perhaps even impossible, is industrial companies or large retailers who have invested heavily. He continues:

They have set up subsidiaries, often with local partners, and operate in accordance with Russian law with contracts and regulations. If they leave the country, the local consequences will be huge and the financial consequences for the group significant.

What measures have been taken by the respective brands?

On Wednesday evening, Renault announced the suspension of its Moscow plant. This does not mean that the group with 45,000 employees in Russia (its second market in the world) is finally leaving the country. He intends to “evaluate possible options for his participation” in the subsidiary “AvtoVAZ” (brand “Lada”), in which he owns 67%.

War in Ukraine: Renault suspends its plant in Moscow (March 23, 2022)

For its part, TotalEnergies will stop purchasing Russian oil and oil products by the end of 2022. The company said it could not refuse Russian gas, on which it depends (30% of production) and on which it has “25 years”. was signed.

The Adeo group, owned by the Mullier family, which owns Auchan (more than 230 stores in Russia), Decathlon and Leroy Merlin, has renewed its refusal to leave Russia. The amounts spent are more significant for the DIY link (the second largest market after France). Management sees the closure as “deliberate bankruptcy” and “opening the way for expropriation that will bolster Russia’s financial capacity.” This is what Michel Noir calls a “big back”.

“The example was shown in other conflicts. Companies don’t quit, keep a low profile, don’t invest anymore, limit their visibility… And wait for the war to pass. »

Michel Noir (Founder of consulting firm Origa)

Find all our articles about the war in Ukraine

Lisa Duar

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