Skip to content

Going or staying in Russia, a problem of French companies

PARIS: In his speech to the French parliament on Wednesday, Ukrainian President Volodymyr Zelensky again asked French companies to leave Russia, a choice few of them have decided to make so far.

Before the war, more than 500 French companies (including CAC 40 groups) operated in Russia, according to the French Ministry of Economy, but the Franco-Russian Chamber of Commerce and Industry required “more than 400 members” on its website. .

By 2020, in conjunction with Covid-19, exports to Russia reached 5.2 billion euros, making Russia the seventh largest market in France outside the European Union, according to Bercy.

Ever since the same origin, France is the first foreign employer in Russia, with about 160,000 employees, certain groups are specifically present there, such as Renault, 67% shareholder of local manufacturer Avtovaz, and its Lada brand.

Renault, which the Ukrainian government has urged to circumvent worldwide, has not questioned its presence there: if production at the plant declines due to supply problems, it resumed two days ago. Regarding Avtovaz, the French group has invested heavily in it and fears forced nationalization upon departure.

Another CAC 40 group with a significant Russian footprint, TotalEnergies produces 16.6% of its hydrocarbons in Russia, and even 30% for gas alone, with strong participation in the Yamal gas zone, in the far north of the country.

TotalEnergies owns a 20% stake in Yamal LNG, a liquefied natural gas project that began production in 2020, and a 10% stake in Artic LNG 2, which should begin delivery in 2023. The group also owns 19.4% of Russian gas giant Novatek.

TotalEnergies CEO Patrick Pouyanné made it clear on Wednesday that his group could not give up Russian gas and explained that it had signed “25-year contracts”. “And I do not know how to get out of these agreements,” he said. However, the organization has announced that it will cancel all purchases of Russian oil or oil products before the end of 2022.

Environment presidential candidate Yannick Jadot accused the energy company of “involvement in war crimes”, a charge the group responded to with a statement of defamation against MEP.

Still in energy matters, the Engie group, which co-financed the Nord Stream 2 gas pipeline, warned that there was a risk of losing up to one billion euros in this suspended project. However, it does not exist on Russian soil but is a 9% shareholder in the current Nord Stream gas pipeline.

Exposure determines the choice of companies

Another large local employer is Société Générale, the majority owner of Rosbank (12,000 employees), which is a major player in the Russian banking system. On March 16, Frédéric Oudéa, its chief executive, recalled that its subsidiary had been “independently organized and managed after the events in Crimea” in 2014, adding that it had “given no indication” of its future in Russia.

On the service side, several brands owned by the Mulliez family are very well established in Russia, first Leroy Merlin, which is the second largest market after France, but also Auchan, which produces more than 10% of its sales in Russia, or again. the sports brand Decathlon.

Adeo, the holding company of Leroy Merlin, reiterated on Wednesday that it would continue its operations in Russia, but intended to “stop” its new investments.

Closing its stores would be considered a “planned bankruptcy”, “an open path for expropriation that would strengthen Russia’s financial potential”, the group defended in a statement to AFP.

Several industries have chosen the opposite, such as luxury and fashion. In early March, Hermès, soon after Chanel, LVMH and Kering, announced the closure of its stores in Russia, with some of its brand executives such as Balenciaga (Kering group) even taking up Ukraine’s cause in the conflict.

But the difficulties are elsewhere for the companies, because Russia has decided to increase pressure on foreign groups that would be tempted to withdraw, without hesitation to stir up the threat of nationalization of local assets.

The Employers’ Movement Ethics (Large, independent companies and growth companies) places the responsibility on the government. “It is up to the (French) state, and only then, to decide and order companies to close and leave the territory – and by taking the consequences locally and in France of this decision,” he said on Wednesday.

Start investing your money in cryptocurrencies and get Free Bitcoin when you buy or sell 100$ or more if you register in Coinbase