Chinese Companies in Dilemma Over Russia 

Chinese Companies in Dilemma Over Russia

Chinese enterprises are caught between the high reputational risk of remaining in Russia during its war on Ukraine and the pro-Moscow sentiment that dominates China’s state-controlled media. So far, most have chosen to remain silent.

According to the Yale School of Management, more than 400 companies have announced their withdrawal from Russia’s economy since Putin launched the war on Feb. 24. Most are based in the U.S., European Union, Japan and South Korea.

Salvatore Babones, an associate professor at the University of Sydney with expertise in the political economy of the Indo-Pacific region, said that for companies outside China, the desire to maintain a positive public image prompted their withdrawal from Russia.

“The risk of remaining in Russia is reputational,” he told VOA Mandarin in a phone interview. “Russia is a relatively small market, and there’s a huge public reaction against Russia right now. They (the companies) are responding to consumer pressure.”

Russia’s imports from China totaled about $54.9 billion in 2020. China is the largest source, followed by Germany, at $23.4 billion, and the United States, with just over $13.2 billion, according to the website Trading Economics, which uses figures from the United Nations COMTRADE database. By comparison, the site reports that China’s exports to the U.S. in 2020 totaled $452.6 billion.

Dan Harris, a trade lawyer who specializes in doing business in emerging markets and co-authors the China Law Blog, said the business calculus has changed because of the sanctions imposed on Russia.

“Companies that are not sanctioned … they are saying ‘I’m out’ because of reputational reasons or because it’s not worth figuring out and risking getting in trouble to sell a hundred thousand dollars’ worth of product to Russia. It’s just easier and safer to get out,” he told VOA Mandarin by phone.

Originally posted 2022-03-25 07:43:21.


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