Doing business with Russia is increasingly becoming a commercial risk for German companies
Some of them, like the Ritter Sport, have already suffered image damage because they are still operating in Russia. Knauf, the manufacturer of gypsum, is also still active in this country, despite the fact that one of the company’s factories in Donbass was bombed by the Russians, writes the Welt daily portal, commenting on information on Friday about the sale of gypsum by Henkel. The Russian part of its business.
This step by Henkel should become an example for other companies to follow, although it was long overdue after Russia’s attack on Ukraine, Welt stresses, recalling that 27 large German companies still operate in Russia.
Henkel sold its business in Russia for 600 million euros. “If this step is successful even for the manufacturer Persil, which with eleven factories in Russia has been more involved in this country than any other German company, then for others it is also possible” – Welt notes. He adds that the “general explanations of some managers” that by staying in Russia they have in mind the welfare of local employees or fear expropriation or loss of trademark rights “often seem to be bogus arguments”.
As “Welt” stresses, finding solutions for German companies operating in Russia is becoming more and more urgent, because “it is becoming an increasingly commercial risk”, and it is becoming increasingly difficult to explain these activities to employees and customers. Companies such as Ritter Sport have already suffered image damage because of this, the paper comments. Gypsum manufacturer Knauf “remains active in Russia despite the country’s bombing of one of the group’s factories in Donbass.”
In addition to reputational damage, there are increased legal risks. Russia is currently a country whose leader is wanted almost all over the world under an arrest warrant. Western companies can no longer trust the Russian administration to comply with international rules for protecting property rights or trademarks, Felt writes.
The arrest of a Wall Street Journal journalist shows there are also risks to workers in Russia as the state tries to put pressure on companies. So it’s time to find a good solution. Henkel has proven that this can be done,” the German daily wrote.
Henkel, one of the companies included in the DAX index of largest companies on the Frankfurt Stock Exchange, announced the sale of its Russia business on Friday — more than a year after announcing its intention. The company confirmed that three Russian financial investors have purchased a working area including 11 factories in Russia for 600 million euros. The Russian market accounted for 5 percent. Henkel sales.
Trade with Russia was contentious in the German economy from the start of the war. Immediately after the attack on Ukraine, most companies simply shut down operations and cut back on advertising and investment spending.
“It seems that those German companies that have not yet withdrawn want to continue operating,” the newspaper wrote. On Friday, Knauf confirmed it would remain active in both Russia and Ukraine — despite the Russian Air Force bombing a factory in Ukraine’s Donbass in May 2022.
The ranking compiled by Yale University shows 27 large German companies, from clothing retailer New Yorker, to confectionery manufacturer Storck, to medical device manufacturer Siemens Healtheneers, in the category of companies that continue to operate unabated in Russia, confirms “Welt”.
A number of companies fall into the “wait and see” category, such as Heidelberg Cement and copper producer Aurubis.
Apparently, some managers are watching to see if the mood reverses – and disappears as needed. The German daily concluded that several companies, such as jam maker Zentis, have left questions about their current operations in Russia unanswered for the time being.
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