Recently, it has become clear that not all American, European or international companies and corporations have honor and conscience. While some of the largest players, after the start of the Russian invasion of Ukraine, completely curtailed all assets, all business in Russia, and left the country’s market, others continue to earn money by investing in their business in Russia.
For example, IKEA, which has been trying to stay on the Russian market for so long, eventually left, having sold everything it owned. And this despite the high risks, both reputational and financial.
McDonald’s, rightfully ranked first in terms of income among all chains in the fast food segment in Russia. It has existed on the Russian market for over 30 years.
“The humanitarian crisis caused by the war in Ukraine and the accelerating uncertainty in the business environment have led McDonald’s to conclude that continuing to own a business in Russia is no longer viable and inconsistent with McDonald’s values,” the company said in a statement.
McDonald’s sold restaurants in Russia to a “local buyer”. At the same time, it banned the use of the McDonald’s logo, “which led to the refusal to use the name, logo, brands and menu of McDonald’s.”
The German manufacturer of equipment Siemens announced the termination of activities and withdrawal from the Russian market.
Here’s what it says on the company’s website.
“The company has started the procedure for terminating its production activities and all production activities”
This decision was naturally connected with the events in Ukraine, Siemens explained.
At the same time, Siemens is one of the main suppliers of power equipment. And despite this, on March 2, 2022, the concern decided to suspend the supply of its products to Russia. Also, due to the events in Ukraine and sanctions, the company suspended the work of all new business projects.
The American brand Nike confirmed the decision to completely leave the Russian market, as stated on the company’s website.
“Nike Inc. has made the decision to withdraw from the Russian market. As a result, nike.com and the Nike mobile app will no longer be available in this region,” the brand said in a statement.
All stores that were previously temporarily closed will no longer be open.
There are other examples, pharmaceutical companies, beverage manufacturers, the list is endless.
All these companies decided to leave the Russian market for various reasons, for some the fact of impossible logistics turned out to be decisive, for some it was reputational risks, some simply acted as their own conscience told them.
But there are other examples as well. Examples of companies that show that nothing is more important than profit.
But there are other examples as well.
Forbes publishes an article about Malmö-registered bed manufacturer Hilding Anders, which owns a 73% stake in the Russian company Askona. It is worth clarifying that Askona is one of the largest players in the Russian market of sleep products, it produces about 10 thousand mattresses every day. Askona accounts for 52% of all Hilding Anders’ profits.
But the dilemma is that Hilding Anders is owned by the American venture capital giant KKR, which have been vehemently condemning Russia’s actions since the start of hostilities in Ukraine.
At the same time, in the first six months of 2022, KKR invested more than $100 million in the development of the askona business.
These funds will be used for modernization, including ensuring the safety of employees, allocating premises for hazardous industrial facilities, automating the technical process, increasing productivity and purchasing new equipment.
A rather dubious investment, especially when you look at what
Hilding Anders, through whom all finances go directly, has been leveraged for a long time and most of its borrowing consists of a €500 million exchange loan maturing at the end of 2024, and its price has already fallen from €80 to €49 since the start of the war .
It turns out that KKR has a choice.
Either abandon Hilding Anders, the most profitable asset, or abandon this venture. After all, toxicity is obvious, which is already manifested in quite specific stock quotes, not to mention reputational costs.
It has become clear that at present, despite KKR’s increased presence in the Nordic countries, the fund will not be able to help Hilding Anders with its further cash flows. After all, it is one thing to receive a net profit, and quite another to make large public investments in conditions when the whole world is extremely negative towards such hysteria. This means that the Swedish company will have to find a way out of the situation on its own, faced with strong criticism on the topic “a company that supports Russian aggression in Ukraine.
Analysts are unanimous in their opinion that Hilding Anders will face difficulties in meeting its obligations to banks, as a result, KKR will be forced to give up control of such an asset.
At the same time, Hilding Anders are in a weakened state: constant changes in leadership, constant incomprehensible stories with the headquarters.
And despite the seemingly strengthening of the Russian ruble, including due to rising gas and oil prices, the situation on the Russian market remains critical. The huge geopolitical risks associated with everything connected with Russia, the intensifying economic sanctions – all this has directly affected investors.
In the meantime, the KKR investment fund receives its income from Russian assets, despite all the sanctions.
Meanwhile, ordinary Americans will pay with their wallets, feeling inflation, rising gas and gasoline prices, and other consequences of breaking economic ties that big business so cynically avoids.
So is there honor and conscience in big business? Or do any moral aspects go by the wayside when it comes to maximizing profits? A really ambiguous question, in the conditions of developed capitalism, in conditions when the world is faced with something that probably never happened before. And here each company decides for itself. But one thing is clear and understandable for sure.
American citizens who have invested in Russian securities cannot make a profit, but the funds did not deprive themselves of such duplicity, therefore no moral and ethical considerations will force KKR to abandon Russian profits, although Hilding Anders will certainly face a huge financial collapse.