The constant trickle of companies announcing their disassociation from Russia due to the invasion of Ukraine has become for the third week of war in a torrent of signatures announcing their exit or the paralysis of their activities in the aggressor country: they are already more than 330 companiesaccording to the account updated daily by Yale professor Jeffrey Sonnenfeld.
Among them, some stand out for their special geopolitical resonance: this is the case of the hamburger restaurant McDonald’s (which has temporarily closed its 850 stores in the country) or the jeans manufacturer Levi Strauss (which has suspended its sales there), whose landing in Moscow during the collapse of the USSR symbolized the triumph of the free market that opened the doors to globalization, and that now with their disconnection they anticipate -according to several experts- a setback to this process of planetary exchange and a revival of the economic and commercial blocs.
And it is that the opening of the first McDonald’s in Russia, the one in Pushkin Square, was more than just the start-up of a new restaurant: to begin with, at that time (January 31, 1990) it was the local of the brand largest in the world, with capacity for 700 diners, and the expectation generated by its inauguration caused massive queues with wait up to two hours for Muscovites eager to try the burger.
In the case of Levi Strauss, his landing in Moscow was hailed as “bad news for smugglers”, because the famous model 501 pants were for decades the object of desire for young Russians, who could only get them – at very high prices – on the black market or by buying them from foreign visitors who wore them. In fact, hundreds of people crowded before the brand’s first store for the opening of doors on that February 13, 1993, which occurred at a very symbolic time: 5:01 in the afternoon.
Two blocks
“Precisely these business landings that occurred after the fall of the wall are one of the explanations (not justifications) of the animosity that Putin and other Russians have developed towards the West: they felt insulted and dismissed by a capitalist bloc that, for them, came to make a fool of them”, explains Jordi Sevilla, Senior Advisor of Economic Context at LLYC and former Minister of Public Administration.
“For many Russians, the transition to capitalism it was a time of hunger and privatization; the symbolism that the arrival of McDonald’s or Coca Cola has for them is different than for us.” Thus, globalization in places like Russia or China, according to Sevilla, was used instrumentally to attract companies and improve income levels, “but without that permeates the interpretation that was made in the West that the interrelation between countries reduces the incentive for war: a vision that has not worked, as can be seen with this invasion,” he summarizes.
In addition to the philosophy of globalization, the war also threatens his economic model: “What Putin wants is to return to the Cold War,” says Alejandro Ruelas-Gossi, professor of Strategy at the University of Navarra; “He wants to go back to that world where there were two planets that they did not coincide more than in the Olympic Games. Globalization has not worked for them, Russia is now basically a gas station, and Putin prefers the old situation. If he gets away with it, it will be a no-return situation: it will be the death of globalization, and the bloc economy will return, which is terrible, because it will force each area to develop industries and products that they do not have, instead of specializing in what they do best and buy the rest from the rest of the world, as is happening now”. Seville is also of the opinion that “we are going back to blocks: economic, technological, and perhaps also political, one with a liberal- democratic, and another with an autocratic-dictatorial system”.
The return of the marks
In this context, a future return to the country of the brands that are now disconnecting from Russia seems unlikely, although -experts point out- it will depend on how long the conflict lasts. “Forget it, if it is because of Putin, the companies that have left will not return; look at the announcement they have made that they are considering expropriate company assets that they leave,” says Ruelas-Gossi. “I see a return in the short term as very difficult, given the harshness of the sanctions that the EU has imposed.
Even if the conflict ends, it will take time for everything to come undone, at least one or two years, and the problem is that, by then, the situation may have become entrenched“, adds Sevilla. In this sense, the problem is not only one of political will but also an economic substratum. Pablo Contreras, business consultant and professor at EAE Business School explains it: “If the conflict lasts a short time, commercial relations, agreements and the necessary infrastructure for brands to operate will still be there; Now, if this goes on for a long time, those networks – which are difficult to build and which are necessary for a company to function – will be dismantled”.
And who needs brands? “Well, we will have to see what psychological impact it has [su retirada] in the Russian population, because thanks to them they were connected with the rest of the world and made them live in a Western way,” says Contreras. “Let’s not forget that there are already many Russians who they have not known the USSR and they are used to a way of life in which these brands are constantly present. Brands play a very important role today in how we consume, how we act and value the moments of well-being that they offer us.
If the marks disappear, so does the meaning associated with them and so does the connection to our idea of well-being. We will see to what extent this generates some kind of reaction; and let’s not forget the Russian investor pressure (distributors and merchants) who will want these firms on which they depend to return to the country,” he concludes.
More companies against Russia: mining, banking and video games
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The list of companies leaving Russia or reducing their operations there has grown in recent hours with the mining giant Rio Tinto, the first in its sector to take the step, and the US bank Goldman Sachs, which has announced that it is going to “reduce gradually” its presence in the Eurasian country. The Japanese manufacturers of consoles and video games Sony and Nintendo have also announced the cancellation of the shipment of hardware and software to the Eurasian country, and from Japan also come two multinationals that until now had refused to take measures against Moscow but that this Thursday they have adopted them: the clothing firm Uniqlo and tobacco company Japan Tobacco.
In a videoconference address addressed to his government, Russian President Vladimir Putin warned that companies that have left Russia could see their assets seized and that “there are already legal formulas” to do so. He has also admitted that the sanctions have had an impact on Russia, but has assured that the economy will adapt over time.