It has been a year since the invasion, and more than 60% of Japanese companies based in Russia have either suspended or withdrawn from the local business.



A total of 64.6% of companies will withdraw or suspend business, an increase of about 10 points from the previous survey in August last year.

Over 50 years of history as a general trading company forced to withdraw

Some companies have been forced out of business due to the prolonged Russian invasion of Ukraine.



Kanematsu, a general trading company in Tokyo, withdrew from its Russian business, which has a history of more than 50 years, at the end of last year.

Before the invasion, this company was involved in the export of equipment for crab fishing boats and metals used for car parts, and sales from the Russian business reached over 4.5 billion yen at peak times.

However, after the invasion, some products became subject to Russian sanctions and could not be exported, and the company suspended transactions in consideration of business risks, so sales last year were zero.



Over the past year, the company has held numerous online meetings between its headquarters in Tokyo and its office in Moscow to seek the continuation of its business.

However, due to the unpredictability of the future, we decided to lay off the local staff at the Moscow office and withdraw the expatriate staff to put it in a dormant state.

A male employee who was stationed in Russia until last year said, "The world changed completely in one day. The most painful thing was that I had no choice but to dismiss the staff who had been working with me for a long time. I hope that peace will return soon. I want you to."



The company claims that the withdrawal will have only a minor impact on its business performance, but it is feared that the loss of its bases will make it difficult to gather local information, which will reduce its ability to generate new business. .

Kazuo Kondo, General Manager of the Planning Department at Kanematsu, said, "Overseas bases are important locations for building up a business as a trading company, so it's a disappointing thing to dormant. I want to fix it," he says.

Approximately 60% of Japanese companies “suspend” local operations

It will soon be a year since Russia invaded Ukraine.

A survey by JETRO (Japan External Trade Organization) found that more than 60% of Japanese companies based in Russia have suspended or withdrawn from the local business as the invasion is protracted.



This survey was conducted by JETRO in late January, targeting 198 Japanese companies based in Russia, and received responses from 99 companies.

Among these, when asked about local businesses,



▽ 4% of the companies answered that they “withdrew/decided to withdraw”,


▽ 17.2% answered “total suspension”, and


▽ 43.4 answered “partial suspension”. %,


▽ 35.4% answered “as usual”.



Compared to the previous survey, which was conducted in August last year, about half a year after the invasion, the number


of responses for "total suspension" and "partial suspension" increased by 11 points, reaching 60.6%.

The reasons for business suspension are:


▽Changes in head office policies,


▽Reputation risk that damages the company's credibility and image, and


▽Disruption and stagnation of logistics.



Also, looking at the prospects for six months to a year from now,


more than 10% of companies expect to withdraw because the business environment will not improve for the foreseeable future


, while more than 37% of companies expect to maintain.

Regarding the survey results, JETRO said, "The ratio of companies that have no choice but to make tough decisions is increasing, and it can be said that there will be more companies that will have to make decisions with a view to withdrawing from the business. On the other hand, JETRO will continue to do business in Russia. We hear from companies that have been doing business for many years that it would be difficult for them to withdraw early because their market share will be taken away by other countries such as China."

Movement away from Russia spreads

A year has passed since the invasion, and Japanese companies expanding into Russia are moving further away from Russia, such as withdrawing their businesses.



Among them, ▽ AGC, a major material company, announced in February that it had begun to consider withdrawing from the local business due to the unforeseeable future of the business.



The company, which produces glass for construction and automobiles at two factories in Russia and sold 40 billion yen last year, has been out of operation since October last year.



In addition, in January, a subsidiary of Hitachi, Ltd., which handles the power transmission and distribution business, announced that it would sell its Russian business to local management and withdraw from the business. are considering transferring.

Already among automakers,


Toyota

announced its withdrawal in September last year,


Nissan in October last year, and Mazda in November last year.


increase.



Furthermore, although they have not decided to withdraw,


Isuzu Motors and


Mitsubishi Motors,


as well as construction machinery manufacturers


Komatsu and


Hitachi Construction Machinery, have suspended production in Russia for a long time. .

In addition,


major advertising company Dentsu Group has decided to sell shares in a local joint venture, and


Kao has decided to sell its products to Russia, with the exception of some products for women and infants. We have suspended exports and shipments, as well as local advertising and publicity.

In addition, ▽ "Fast Retailing" has suspended the operation of UNIQLO stores in Russia.


On the other hand, ▽ “JT = Japan Tobacco” has not made any new investments, but continues production and sales.

In addition, Yokohama Rubber, a major tire manufacturer, has partially resumed production.