Stay in Russia or leave Russia?

Companies around the world are faced with this question.

Anyone who leaves refers to morality and conscience.

Those who stay lead to the constraints and the responsibility that one has for the employees.

But why should some decision-makers be so much more moral than others?

Have some managers slept in ethics class?

It's not that easy, and one shouldn't shrug the shoulders at the companies' statements at face value and say: Some are just more moral than the others.

Because there are some indications that morale alone is not what makes the difference.

Most of the time it probably isn't even the deciding factor.

Demand is outstripping production anyway

First, there are the capacity issues that some industries are currently struggling with.

Many companies cannot keep up with production.

The demand is much higher than what the factories can provide.

If you stop selling in Russia in such a situation, which may only account for a few percent of sales, you lose almost nothing: you just can't serve fewer customers.

At the same time, the company gains a great deal: public standing and the security of not getting caught up in a wave of anger on social media.

The company can send out a well-sounding press release, collect hearts on social media, and point to morals.

Past scandals no longer weigh so heavily.

There are a few industries that do this.

In Germany, the most prominent example is the auto industry.

Russia as a market is not very important for them, the companies are often on short-time work anyway due to the lack of semiconductors.

Not being able or having to supply a country can even simplify logistics.

Russia is no longer attractive

Second, there is the economic environment in Russia.

Nobody can rely on legal certainty anymore.

Due to the sanctions, maintaining cash flows is both a brain teaser and a test of courage.

In Transparency International's corruption index, Russia ranks 136th with Angola, Liberia and Mali. For many companies, Russia is therefore simply not a market they can rely on in the long term.

At the latest with the invasion of Ukraine, it was also clear that the Russian economy would be seriously damaged.

This means that Russia is no longer attractive, especially for sectors that are dependent on the economy.

Thirdly, a war in such a situation can even come in handy from a legal point of view.

Companies can invoke the force majeure clause and withdraw from contracts or at least let them rest.

For example, if you have production facilities in Russia that you are in danger of losing, it is painful.

But thanks to force majeure, at least the legal consequential costs can be limited.

Greetings from Huawei

Fourth, companies almost always want to reduce uncertainty.

With Russia's invasion of Ukraine, it was far safer for many companies to take a one-time write-off than risk being caught between the fronts.

Reputation costs and legal risks can hardly be calculated for companies that are being crushed by world politics.

Greetings from Huawei.

Fifth, companies not only reduce their reputation costs by withdrawing from Russia.

They also send a motivating signal to the workforce and dress up in the battle for skilled workers.

Look, programmers, we're serious about purpose.

The question remains why some companies stay in Russia at all, accept this uncertainty and run the risk of being attacked on social media.

Most of the time, the reasons have very little to do with morals: companies are often active in sectors that are less dependent on the economy and are not characterized by production shortages.

Anyone who then withdraws from Russia actually loses sales.

This applies, for example, to many consumer goods and food companies: Even if the economy is weakening, the Russians will still have to feed themselves and do their laundry.

If Ritter Sport no longer sells its chocolate bars in Russia – its second most important market – the Chinese will not suddenly eat more chocolate.

It's easy to portray yourself as a man of conviction when baseless economic calculation and high morality conveniently coincide.

How much values ​​are worth only becomes apparent when they cost something.