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Under pressure, several major American groups cut ties with Russia on Tuesday, such as McDonald’s, Coca-Cola and Starbucks.
Coca-Cola will suspend its operations in Russia.
AFP
McDonald’s, Coca-Cola, Starbucks and a few other American multinationals blamed for being slow to cut ties with Russia finally gave in to public pressure and suspended their operations in the country, in reaction to the invasion of Ukraine by the Russian army.
Several of these companies, symbols of American culture in the world, had been the subject of a call for a boycott on social networks for a few days, while investors began to ask questions. McDonald’s decided on Tuesday to temporarily close its 850 restaurants in Russia.
“The situation is extraordinarily difficult for a global brand like ours and there are many considerations to take into account,” said the boss of the fast-food chain, Chris Kempczinski. The group has 62,000 employees in the country, whom it will continue to pay, and multiple suppliers. Russia represents 9% of its turnover and 3% of its operating profit.
Pepsi does not imitate Coca-Cola
“At the same time, respecting our values means that we cannot ignore the unnecessary human suffering taking place in Ukraine,” added Chris Kempczinski. Starbucks, which until now claimed that its 130 cafes in Russia were managed under franchise by a Kuwaiti group, finally indicated on Tuesday that the latter had agreed to temporarily close the establishments bearing its name.
And Coca-Cola will suspend its operations in the country. Its competitor PepsiCo, present in Russia for more than 60 years, has chosen to stop selling its soft drinks but to continue to supply foods deemed essential, such as baby powder. Its boss Ramon Laguarta also highlighted the importance of continuing to support its 20,000 employees in the country.
Yum! Brands, whose approximately 1,000 KFC restaurants and 50 Pizza Hut establishments in Russia are almost all independently owned, announced on Monday evening the suspension of all its investments in the country.
Hesitations
In total, more than 290 major companies with a significant presence in Russia have announced their withdrawal, according to an inventory maintained by a team at Yale University. Its initiator, management professor Jeffrey Sonnenfeld, has repeatedly highlighted the role that the voluntary departure of 200 major groups from South Africa in the 1980s had in the fall of Apartheid.
About 30 multinationals still remain on the list of companies with significant exposure to Russia. Some groups may have legitimate reasons to stay, note several ethics and communication experts interviewed by AFP, citing employee safety first.
Some companies may be hesitant because they think they can play a role of intermediary between the parties or because they manufacture in the country essential products such as pharmaceutical ingredients, also notes Tim Fort, professor of business ethics at the University of ‘Indiana. However, he adds, “this is probably a good time to choose a side and it does not seem very difficult to me to do so”.
(AFP)
