Survey Japanese Companies Maintain Suspended Operations in Russia

24 Feb, 2024

Survey Japanese Companies Maintain Suspended Operations in Russia

Most Japanese companies surveyed by the Japan External Trade Organization (JETRO) have maintained their decisions to either partially or fully suspend operations in Russia following its invasion of Ukraine two years ago, as reported by JETRO on Wednesday. Japan, a member of the Group of Seven developed nations, has aligned with Western sanctions on Russia in response to Moscow's war on Ukraine since February 2022, while retaining stakes in select energy projects for energy security purposes.

In early February, JETRO surveyed 156 companies operating in Russia's major cities, Moscow and St. Petersburg. Of the 63 respondents, 60.3% confirmed partial or full suspension of business activities in Russia, marking a slight decrease from JETRO's previous survey in May 2023.

Among the companies with suspended operations, 25.4% reported a full halt, representing a 9.2 percentage point increase, while 34.9% continued with "business as usual," a 4 percentage point rise. These firms adopting normal operations have diversified payment methods and currencies and revised business partnerships and product strategies to circumvent sanctions.

According to JETRO's survey, companies continuing business in Russia cited favorable market conditions, anticipation of future resumption of business ties between Japan and Russia, and the growth potential of the Russian market as motivating factors. Conversely, reasons for suspending operations included reputational risks, sanctions, and changes in the parent company's stance towards Russia. Withdrawn companies are either transferring or selling their assets to local investors.

Some companies still maintain expatriate staff in Russia or have personnel operating outside the country, as per JETRO's findings.