More than 20% of major Japanese companies doing business in Russia decided to end such operations after Moscow invaded Ukraine, according to a survey by a credit research firm.
In the Teikoku Databank Ltd. Among 168 major Japanese companies that operate businesses in Russia, 37 companies said they planned to halt operations there from March 15 amid Western economic sanctions and a deteriorating environment due to disruptions to logistics and supply chains.
Twenty-eight of the 37 companies were manufacturers such as automakers and heavy construction equipment. No company planned to withdraw completely from the Russian market, according to the survey.
While some large Japanese companies such as Toyota Motor Corp. and Fast Retailing Co. joined a growing list of global companies, including McDonald’s Corp. and Apple Inc., shutting down their local operations, the majority of Japan’s 168 companies were left in place. limbo as the prospects for war remain hazy.
Companies will face a reputational risk if they continue to operate in the country, as such a move can be seen as support for the invasion, while they also face the threat of the Russian government to nationalize company assets. who are withdrawing from the country, the research firm said in a report.
“The number of companies shutting down operations in Russia is expected to increase further” due to these risks, Teikoku Databank said.
Of the 37 companies that have halted operations in Russia, 22 have opted to suspend transactions, including shipping products to the country, while seven companies have opted to halt production of goods. Four have decided to suspend local operations such as stores.
In March, Toyota halted operations at its St. Petersburg plant due to supply chain disruptions and fired its Russia-based staff, while Fast Retailing announced it would temporarily close its 50 stores in the country.
Addressing Japanese lawmakers via video link in late March, Ukrainian President Volodymyr Zelenskyy called on Japan to ban trade with Russia to stop what he called the “tsunami” of its invasion of his country.
Worldwide, more than 600 companies have announced their withdrawal from Russia or the suspension of their Russian operations, according to the Yale School of Management.
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