These Are The American Companies Still Doing Business With Russia

When Russia annexed Crimea, officially part of Ukraine, in 2014, the U.S. government implemented sanctions that prevented U.S. companies or individuals from investing in anything in the Crimea region, exporting or importing from the region, or operating in Crimea, according to The Department of the Treasury.

After the Russian military invasion of Ukraine in March 2022, certain countries, such as the United States, the European Union, and some other Western nations, decided to impose further sanctions, including restrictions on Russia's Central Bank, a total ban on the export of certain technologies, and even excluding some Russian banks from the international payments system SWIFT (via Al Jazeera).

But, as per Jeffrey Sonnenfeld from Yale School of Management for Time, the massive exodus of western companies from Russia was actually a consequence of an enormous public backlash, possible only in the time of social media, which demanded the companies to leave the Russian market. Sonnenfeld believes that this is a sign of social responsibility: "They have these workers saying they were ashamed to be part of a firm involved in supporting the devil. There was an internal revulsion that led to a quick retreat." While many question whether this decision was sensible, since the sanctions proved to be "ineffective, immoral, [and] politically convenient," as per scholar Richard Hanania, many companies and owners of famous brands succumbed to pressure. But others didn't. These are the American companies still doing business with Russia.

The company that owns brands like Oreo, Ritz, Cadbury, and Toblerone heavily scaled back its operations in Russia, but it hasn't stopped sales on the Russian market. According to Ally Marotti for Crain's Chicago Business, the company did stop its import and export business with Russia but will continue to provide basic food to Russian people, as leaving them without necessities would be unethical. The company is helping its employees, their friends, and families to flee Ukraine. The spokesperson for the company stated the company is offering their facilities in neighboring countries as shelters for Ukrainian refugees, although they didn't specify exactly which facilities or where they are.

As per Mondelēz International CEO Dirk Van de Put, all operations in Ukraine have been halted while the company is helping Ukrainian employees with the aforementioned methods. The company will continue to help "maintain continuity of the food supply" through basic offerings in Russia but will pause new investments and promotional activities in the country. The company will donate a "multi-million-dollar" amount to aid organizations such as Save The Children and will run a corporate giving program, matching employee donations to the International Federation of the Red Cross (IFRC) (via Mondelēz International).

Many International chain hotel companies have found themselves in a tricky situation when it comes to the Russian market, as many of the companies operate on the basis of franchise business contracts, where the actual premises, such as hotels, are owned by third parties, not the company itself.

According to Marriott International CEO Tony Capuano, the company's annual Russian revenue, deriving from the 28 Marriott International hotels in the country, is "not particularly significant," and it adds up to less than 1% of company's annual revenues, reports Sam Lounsberry for Crain's Chicago Business (via The Real Deal).

In light of this financial reality, the hotel chain closed their corporate office in Moscow overnight but will continue to keep the hotels in the country open. The company will put all the future hotel openings on pause, as well as other future investments. The company allocated $1,000,000 for contributions towards their associate relief fund (via Marriott International).

All 26 Hilton hotels in Russia remain open and running. Similar to other hotel chains, Hilton suspended all new investments and future hotel openings — no additional hotel will be named Hilton in Russia for a foreseeable future. This is a major step for international hotel chains as well as American commercial real estate companies, explains The Street. A massive amount of money is invested in international real estate development projects, so a decision like this, to discontinue already-running investment projects, could mean that company's decision makers believe this conflict will last for a long time.

The company closed their corporate office in Moscow but will continue to provide work and payment for their employees. In addition to this, Hilton will also donate all profits from Russian business operations to different humanitarian organizations helping Ukraine, on the top of $50,000 they already donated to World Central Kitchen and Project Hope organizations (via Hilton).

Hyatt is another hotel chain which has stopped all future activities in Russia but is keeping its existing hotels open. It is not known who owns the five hotels under Hyatt management in the country, but according to the former Russian resident and hospitality industry attorney Scott Antel, who spoke to Crain's Chicago Business, most hotels in Russia are owned by Russian legal entities and investors. While Hyatt will have legal problems with the U.S. government if it continues to manage the hotels under the Hyatt name, people will have real problems if Hyatt removes its name and management, leaving numerous people without employment. This could cause resentment toward the brand in the future: "People remember these things. It's just not good ... Customer goodwill takes a long time to rebuild," concluded Antel (via The Real Deal).

As per Hyatt's official statement, the company provided supplies and accommodation for Ukrainian refugees in their premises across Europe, along with job transfers and relief funds for Hyatt colleagues. They will continue to support their colleagues in Russia in line with the company's hospitality purpose — "to show care when people need it most and provide a place to stay and gather."

According to PepsiCo CEO Ramon Laguarta, the company which "helped create common ground between the United States and the Soviet Union" during the Cold War, will suspend all sales of soda drinks — no one will drink Pepsi-Cola, 7Up or Mirinda in Russia anymore. The company will "stay true to the humanitarian aspect of their business" and will continue to sell essential products, such as milk, baby formula, and baby food. They will also maintain business deals with 20,000 associates and 40,000 agricultural workers in Russia, who are a part of the company's supply chain.

PepsiCo paused all operations in Ukraine and is providing aid for Ukrainian refugees. They boosted food production in countries neighboring Ukraine, along with providing donations of food, milk, and refrigerators to different humanitarian institutions. They will donate $4 million to the Polish Red Cross, Romanian World Vision, the United Nations World Food Programme, World Central Kitchen, and Save the Children. They will also continue to run their corporate Gift Matching Campaign (via PepsiCo).

But PepsiCo is threading a thin line in this situation, as the company experienced backlash in the past for their close ties to the Russian president Vladimir Putin. Former PepsiCo CEO, Indra Nooyi — the same woman who stated that asking for a raise is "cringeworthy" – proclaimed Putin as a "great leader" back in 2014, when Russia annexed a part of Ukraine, Crimea. An undisclosed source who was present at the World Economic meeting with Nooyi told Wall Street Journal that Nooyi insisted on easing the proposed sanctions against Russia (via the New York Post).

The company has production facilities in Russia worth billions of dollars and will not stop manufacturing. Mars Inc.'s many popular pet food brands, like Whiskas, Pedigree, and others, are produced in Russia. The company increased investments in one of their five factories in the country in 2018, after finishing their Rostov Oblast plant — "one of Mars' biggest investment projects in Russia" — a year prior, reports Reuters. According to All About Feed, they continued their expansion plans all through 2021, further investing in the Rostov Oblast plant and boosting production by an additional 60%.

But in light of recent events, per Mars Inc. CEO, Grant F. Reid, the company halted all promotional campaigns in Russia and Belarus, as well as all social media activity. All future investments are paused for the time being. Mars Inc. continues to provide donations of food and aid to Ukrainian associates and will contribute financially: $1.5 million to the Save the Children organization and $500,000 to Humane Society International to help pets and their owners (via Mars Inc.).

Many companies claim their work is of a humanitarian nature, so halting all operations and sales could mean the lack of essential goods, or even worse. As per Sarah Varney for Crain's Chicago Business, a majority of the companies not leaving Russia are "drugmakers, medical device manufacturers, and health care companies," as these companies don't need to comply with sanctions due to exemptions in U.S. and EU laws. These companies emphasize their purpose of serving people, claiming their business is, in many cases, life-sustaining. But corporate altruistic motives are always, without exemption, questionable, as described by Yale School of Management professor Jeffrey Sonnenfeld, "being misguided at best, cynical in the medium case, and outright deplorably misleading and deceptive."

Johnson & Johnson is one of the companies which will not stop operations in Russia because if they do, "people will die or have severe consequences," stated Chief Financial Officer Joseph Wolk for The Wall Street Journal (via Insider).

They will provide access to accommodation and financial resources and donate medical products, such as hygiene kits, health packs, and other medical supplies. The company will donate $5 million to the International Federation Red Cross and Red Crescent, along with the corporate matching program Global Giving Ukraine Crisis Relief Fund. They will also continue to work with International Health Partners, Americares, Direct Relief, IFRC, Save the Children, and UNICEF and enable them access to the company's supply chain network (via Johnson & Johnson).

Sanctions against Russia present a conflict for most tobacco companies, since the Russian market is one of the biggest in the world, worth $18 billion, as almost a third of the adult population smokes. Closing down the sales could lead to the expansion of illegal trade, reports Bloomberg Quint.

According to Philip Morris International, the net revenues from the Russian market account for 6% of the total net revenue of the company, with 3,200 employees in the country. The company decided they will halt all planned future investments in Russia, as well as suspend new product launches and cease promotional activities for the time being. Manufacturing processes will be scaled down, but it is not specified to what extent. The company has closed down the one factory in Ukraine due to safety reasons and will help different organizations with providing food, medicine, and other basic goods to Ukrainian refugees. They promised to donate $10 million to international humanitarian institutions. Employees of the closed factory in Ukraine will continue to receive their monthly payments.

Abbott pharmaceutical company is another company in the group of those who claim their business activities are life-saving: "As a healthcare company, we have an important purpose, which is why at this time we continue to serve people in all countries in which we operate who depend on us for essential products, some life-sustaining," Scott Stoffel, Abbott Laboratories divisional vice president, told Crain's Chicago Business.

Similar to other pharmaceutical giants, Abbotts found itself in the middle of this conflict. Putin's plan to keep the enemies closer by conditioning foreign drug producers to build manufactures in the country in exchange for a market share worked — Abbotts is one of the several international companies which have manufacturing plants in St. Petersburg.

Abbotts will not suspend their production or distribution activities in Russia. The company decided to donate $2 million to International Medical Corps, Americares, and Project HOPE organizations. They also work hard to secure existing supply channels for delivering health care products to Ukrainian people, alongside making donations when appropriate (via Abbott).

The Kimberly-Clark Corporation has been heavily investing in Russia since 1996, building a strong presence in the Russian market. In 2010, the company opened a manufacturing plant in Stupino, where they produce two Huggies diaper lines. Satisfied with the rapid expansion across the Russian market, their plans for the future were bright (via Kimberly-Clark Corporation).This expansion only grew further in 2019, when the company invested $80 million into the Stupino plant, to increase its capacity by up to 40%. Even before the expansion, the Stupino plant was the largest Kimberly-Clark Corporation's manufacturing facility in Central and Eastern Europe, according to Nonwovens Industry Magazine.

The company will stop capital investments in their Russian facility in Stupino but will not suspend manufacturing. They will halt advertisements and other promotional activities in Russia but will continue to sell its products on the basis of humanitarian reasons — they sell baby diapers and feminine pads, which are critical to the health and hygiene of women, girls, and babies.

The Kimberly-Clark Corporation will, in line with trends, donate health and hygiene products, specifically Huggies, Kotex, Kleenex, Depend, and K-C Professional products, worth $500,000, to refugee relief organizations. They will also provide financial support of $500,000 to the Red Cross organization. The company also runs a corporate employee matching program with the International Federation of the Red Cross (via Kimberly-Clark Corporation).

The Kellogg Company is one of the companies which made huge investments in the Russian market in the past years. They acquired the United Bakers Group, the leading Russian cracker and cereal provider, in 2008, gaining six new production facilities in the acquisition, along with 4,000 employees and the United Bakers Group's expansive sales and distribution network (via Kellogg Company). As of this writing, the Kellogg Company will continue manufacturing in their three Russian factories, as well as sell products, such as Pringles and Corn Flakes, on the Russian market. The company stated they will suspend shipments and investments into Russia, though,according to Telegraph.

In addition, the company will donate $1 million to the U.N. Refugee Agency and The Global FoodBanking Network, alongside donations of their food products. As the company stated in their official response to the Ukrainian crisis, they organized local teams in Poland and Romania who help with care package distribution and prepare emergency accommodations (via Kellogg Company).