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For a time, French cement group Lafarge operated a factory in North Korea, about 40 kilometers from Pyongyang, but that was not the case.
this Expats allegedly running The facility is located in the capital and can only be visited with a guardian. Operational or financial control of the plant is illusory.But the French company inherited the asset when it bought Egyptian construction group Orascom in 2008 and subsequently merged with Swiss rival Holcim, retaining a stake until 2017 Internal audit teams will be dispatched regularly. Welcome to Abu Sudia!
Russia may not have become North Korea yet, but for foreigners running Western businesses, a similar sense of unease is certainly beginning to spread.
Eighteen months after the full-scale invasion of Ukraine, a large number of Western brands are still operating in Russia, and some have no intention of leaving, including German retailer Metro and US cigarette maker Philip Morris.
Managers (German nationals) of Russian subsidiaries of these companies For Metro), it must contend with an increasingly stringent regulatory environment, as well as ethical questions about taking an active role in Russia’s war economy. These groups also run businesses that no longer truly belong to them.
If these Russian operations happen to be profitable, the money may not be available – the Kremlin last year banned dividends to companies from countries deemed “unfriendly”, including the United States, Britain and all EU members.
The amounts involved are not insignificant: The Kyiv School of Economics, which closely monitors Western companies’ operations in Russia, estimates that companies from these countries earned Russia $18 billion in profits and $199 billion in revenue in 2022 alone. The Kremlin relaxed the rules slightly in August, but with strict conditions in which spending could not exceed companies’ committed investments in the country. In reality, it is Vladimir Putin’s regime that determines who gets their money.
If you want to exit, it’s too late to exit the country as conditions allow for the extraction of substantial value, if any. The Kremlin must approve any sales of companies in strategic sectors such as banking and energy. It imposes a discount of at least 50% on the value of assets sold and requires a “voluntary” contribution of 10% to the state budget. But only if it doesn’t seize assets and hand them over to regime loyalists, as it did with Carlsberg and Danone in July.
Agathe Desmarais said: “Western companies that chose to stay in the Russian market now face billions in profits that they cannot repatriate, and there is no reason to believe that the Russian leadership will adopt a more flexible posture on this issue anytime soon. ” Senior Policy Fellow at the European Council on Foreign Relations. “If anything, the Russian government is likely to take a more aggressive approach and potentially seize assets – particularly for companies that bring R&D or high-tech knowledge to Russia.”
A renewed push by the United States and Europe to use $300 billion worth of frozen Russian sovereign assets to fund Ukraine reconstruction could spell more bad news for Russia’s Western bloc. If these assets fall into the hands of the Kremlin, Russia’s argument for seizing businesses will become stronger.
Any Western company still holding out hope of investing in the country is mistaken.
“Moral considerations aside,” Desmarais said, “in hindsight, it made more sense for Western companies to leave Russia immediately rather than adopt a wait-and-see approach.”
Svlook
