In July 2023, the world’s media was shaken by news about Russia’s asset nationalization of two Western companies that were planning to exit the Russian market – Danone and Carlsberg. To do so, it deployed mechanisms instigated by Russian President Vladimir Putin's decree in response to the West’s seizure of Russian assets following the full-scale invasion of Ukraine.

However, the two cases were especially notable as the companies in question were simply gifted to members of Putin’s close circle: one was given to an old friend from years ago, and the other to the nephew of Chechen leader Ramzan Kadyrov.

These cases are not just evidence of the whims of the Kremlin – they are loud signals that doing business in Russia can be a dangerous, possibly even fatal, game.

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To leave or remain in Russia?

In the months immediately following Russia’s full-scale invasion of Ukraine, many Western companies announced their withdrawal from Russia. These were brave decisions, despite the loss of significant funds and market opportunities.

For those companies that hesitated, protests and the risk of reputational damage weighed down hard. Many voices asserted unequivocally that doing business in Russia is equivalent to financing its war, which includes daily bombings of Ukrainian cities and villages, murders, kidnappings, torture, rape, and a myriad of other crimes.

However, not all companies were swayed by a sense of moral imperative. Some of them are not well known to the general public; some said that their goods are “necessities”, for example not wanting to leave Russian children without diapers. Others argued that they wanted to remain in Russia in the interests of their employees, or that leaving the Russian market would simply not benefit Ukraine.

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As of now, according to the Leave-Russia volunteer project, 302 companies have completely left the Russian market, 506 are in the process of doing so, and 715 have ceased operations. However, a significant 1,597 continue to trade in Russia.

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This isn’t just about blood money from Russian rubles but the danger potentially facing those businesses.

The case of Danone

French company Danone entered the Russian market back in 1994 and began producing products in Russian factories.

Before Russia’s first acts of aggression against Ukraine in 2014, Russia was Danone's largest national market, even bigger than that of its native France. By 2022, the company owned 13 Russian plants which it clearly did not want to risk losing by cutting ties.

However, Danone ultimately decided to leave this summer – an act which led to the Kremlin standing firmly in its way. By Putin's decree, the company's assets were nationalized and transferred to the management of Ibrahim Zakriev, the nephew of Ramzan Kadyrov. As to Zakriev’s ability to effectively manage the company, which for decades was a leading player in Russia’s consumer economy, it remains an open question, even for Russians loyal to Putin.

Carlsberg: nationalization and arrests

Since 1996, Baltika, which belongs to the Danish company Carlsberg, was the undisputed leader or the Russian beer market. Indeed, it accounted for 40 percent of Carlsberg’s global profits. Before the beginning of Russian aggression in 2014, the Danes invested $13 billion in Russia.

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In July 2023, by the same nationalization decree, the assets of Carlsberg were transferred to the management of Taimuraz Bolloev, who previously managed the Baltika brewery in the 1990s. He also joined joined Putin's close circle of friends around the same time, which clearly had an impact.

In November of this year, two top managers of Baltika were arrested and sent to a Russian prison. They are accused of fraud, namely, the transfer of rights from a Russian company to Carlsberg.

Their fate and futures are unknown since it can be extremely difficult to exit a Russian prison, whilst staying there carries mortal danger.

The case of Magnitsky

Every time we talk about the risks of doing business in Russia according to the rules of the civilized world, I remember the Magnitsky case. It remains a classic example of the futility and naivety of hoping the aggressor state will play by the rules.

Serhii Magnitsky was a lawyer at Bill Browder's Hermitage Capital investment fund. He discovered and publicized a large-scale embezzlement scheme to launder $230 million in tax compensation in Russia. In 2008, Magnitsky was arrested in Moscow, and a year later died in the Matrosskaya Tishina pre-trial detention center under unknown circumstances. Human rights activists believe that Magnitsky was tortured and beaten to death.

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What should those businesses considering leaving Russia do now?

With such cases to look back on, what should foreign companies that have invested heavily in the Russian market for years, and are now seriously considering leaving, do for the best?

The main thing is to have a clear and strategic exit plan. And to be prepared for the fact that it will most likely be impossible to withdraw funds.

But here we are talking about priorities, and the foundation for any business is people. Getting them out alive, unharmed, and free, should be every company's top priority.

Save your workforce and do not expect the bloody aggressor to make exception for you and your business.

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Comments (3)

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Necessity breeds ingenuity.
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Necessity breeds ingenuity.
I've lived through sanctions in my youth, and didn't even notice.

Faced with crippling sanctions, South Africa's story isn't just one of survival, but of remarkable transformation.

The initial bite (lasting about five to eight years) fuelled a "Made in South Africa" drive, birthing domestic production of everything from cars to helicopters.

Foreign brands, ousted by sanctions, paved the way for rising players like Taiwan and South Korea.

Infrastructure boomed, with roads criss-crossing the nation and synthetic fuel blazing a trail.

Ultimately, a self-sufficient nation arose, proving that adversity can be the mother of invention.

Even today, your BMW, Toyota, Volkswagen, or Ford might bear the 2023 South African stamp - a testament to resilience forged in the face of isolation.

This revision streamlines the language, tightens the structure, and adds a touch of intrigue with the opening line.

I hope it captures the essence of your message while remaining concise and engaging.

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United States Military Industrial Complex is pure evil on this earth
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Put on your face mask, in your own home, in the basement, EAT, watch TV, CONSUME, and don't dare to ask questions. CONSUME.

One of the ways a narcissist maintains control is when they use leverage.

Financial, psychological, violence, coercion etc.

The victim may find the courage to break free.

When a narcissist loses control, they go berserk in rage.

An empire, and a dangerous one, in decline. That is the USA.

Sorry for the Ukrainians who will be left with the burden of repaying 100's BILLIONS back to the USA, enriching the bankers (wankers) and the military industrial complex. They are the real profiteers from this war.
The war is not a charity. It is war-for-profit. And Ukrainians are the pawns.

The Russians are decoupling from the West.

You will have ZERO influence over Russians. Drown in your empire of debt.

People in other countries have seen the American double standards, lies and deception. The Global Majority (150 countries) is indifferent.

John
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@United States Military Industrial Complex is pure evil on this earth, posted by and obvious russian troll. Deflect all russia's evil deeds by pointing your finger at the USA. The USA is not invading Ukraine nor trying to murder its population.....thats all on you your country you lowlife putin troll

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John
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I'm not investing in any international company playing Russian roulette. I would also request my leadership not invest tax payers money in companies taking such necessary risks.

On a moral basis why would a western company be politically allowed to operate in a nation that has openly stated it funds criminal enterprises like Wagner who's sole task is to destabilize and extort from our own nations?

Willem van Drimmelen
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@John, who gave the United States permission to bomb and invade Syria and Iraq and still does it in 2023/2024? The global moralizer wants to lecture, but it is illegally occupying Syria? No condemnation of Israel? Double standards.

John
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@Willem van Drimmelen, I'm Canadian (and Italian). FYI Canada backed the the UN's recent Gaza ceasefire and did not join the USA in IRAQ. We are though huge supporters of Ukraine and host the 3rd largest population of Ukrainian heritage folks in the world. Unlike russia who host the 2nd largest population of Ukrainian heritage folks we don't murder and steal resources from them. In fact a recent media survey indicted 64% of Canadians wanted NATO go into Ukraine to directly fight the russian invaders.

You seem to give Russia a pass for it's murderous USSR history and present putin illegal invasions of Georgia and Ukraine. The worst crimes documented against the citizens of Syria (blowing up hospitals, schools and using banned chemical weapons) were also all committed by putin and his buddy Assad's murderous thugs. Murder, lies and then deflection is pretty much the entire putin doctrine.

As much as you obviously hate the USA it must perplex you that so many immigrants want to go there. At the same time so many russians leave that country and its neighbour nations all seek protection of the EU and NATO. No freedom seeking population.....anywhere ...wants to join putin.

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