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International, Tech companies cutting off Russia – Developing Story

Vladimir PUTIN

Vladimir Putin. Credit ©Mikhail Metzel/ POOL TASS

Western governments are not the only ones imposing sanctions on Russia in response to its invasion of Ukraine. Many major retailers and other companies, from Facebook to Nike, are taking it upon themselves to pull back from the Russian market.

On Friday, French luxury retailers LVMH Moët Hennessy Louis Vuitton and Hermès announced that they were pulling out of the Russian market for the time being. The New York Times reported that LVHM alone has more than 120 stores in Russia. The company, for now, will continue to pay its roughly 3,500 employees there, but how will it may not be able to do so for a while as Russian banks have been cut off from foreign transactions.

Hermes released a statement about its decision on LinkedIn. “Deeply concerned by the situation in Europe at this time,” it said. “It’s with regret that we have taken the decision to temporarily close our stores in Russia and pause all our commercial activities from March the 4th evening. We will continue to stand by our local teams.”

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Last Thursday Nike said that it would be temporarily closing all of its stores in Russia. And so did H&M Group. “H&M Group is deeply concerned about the tragic developments in Ukraine and stand with all the people who are suffering. H&M Group has decided to temporarily pause all sales in Russia,” said the company in a statement. “The stores in Ukraine have already been temporarily closed due to the safety of customers and colleagues.”

“H&M Group cares for all colleagues and joins all those around the world who are calling for peace. Clothes and other necessities are donated by the company,” it added. “H&M Foundation has also made donations to Save the Children and to UNHCR.”

Iconic Swedish home furnishings store Ikea has also dropped out of the Russian market. “The devastating war in Ukraine is a human tragedy, and our deepest empathy and concerns are with the millions of people impacted,” the company said in a statement. “The immediate actions of Inter IKEA Group and Ingka Group have been to support the personal safety and security of IKEA co-workers and their families, and we will continue to do so.”

TJX, the owner of T.J. Maxx and Marshalls, has done the same. “Given the recent Russian invasion on Ukraine, ” it said, “the TJX Companies, Inc. (TJX) has committed to divesting its equity ownership in Familia in support of the people of Ukraine. As of March 2, 2022, Doug Mizzi and Scott Goldenberg have resigned from their director and observer positions, respectively, on Familia’s Board of Directors, effective immediately.”

And so has he electronic appliance giant Samsung, which suspended the shipment of its products to Russia. “Our thoughts are with everyone who has been impacted and our priority is to ensure the safety of all our employees and their families,” said Samsung. “We plan to actively support humanitarian efforts around the region, including aid for refugees. To this end, we are donating $6 million, including $1 million in consumer electronics products, as well as voluntary donations from our employees.”

But the biggest example of an American company cutting off Russia is Facebook, which has suspended all ads in Russia and has blocked anyone in Russia from buying ads on the world’s largest social media platform for placement anywhere else in the world.

“Due to the difficulties of operating in Russia at this time, ads targeting people in Russia will be paused, and advertisers within Russia will no longer be able to create or run ads anywhere in the world, including within Russia,” the company said Friday.

Russia struck back against Facebook and other companies like Twitter by limiting access to the platforms. Nick Clegg, Facebook’s president of global affairs, responded to this saying the Russian people have been, “deprived of their everyday ways of connecting with family and friends and silenced from speaking out. We will continue to do everything we can to restore services so they remain available to people to safely and securely express themselves and organize for action.”

Even without the retailers pulling out of the market it would be hard for Russia to import any of the goods that are sold in these stores. This is because of all of the financial sanctions imposed on the country’s banks that leave them unable to access the country’s hundreds of billions of dollars in foreign currency reserves.

The U.S. has also blocked 13 Russian state-owned companies from raising money in the US, including energy giant Gazprom and its two largest banks The Sberbank and VTB Bank.

Russians won’t be able to make up for all of the closed stores by using credit cards to buy items from abroad online. Visa and MasterCard have both suspended any credit card transactions made in Russia for any transaction made with a party outside of that country. But domestic credit card transactions will still be allowed to continue.



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