French multinational retail group Auchan has decided to leave the Russian market, according to La Lettre and Le Figaro. Their sources indicate that the company is in the final stage of negotiations and has at least two potential buyers for its Russian assets—230 hypermarkets that generate 10% of the group's global sales.
Although at the beginning of the full-scale invasion, Auchan's CEO Yves Claude stated that the chain "acts in the interests of the civilian population" and would continue its operations in Russia, the company's position has now changed due to deteriorating business conditions, particularly because of Western sanctions, explain sources from the French publications.
However, as noted by Agiya Zagrebelska, Policy Director of the Economic Security Council of Ukraine (ESCU), on Radio NV, an announcement of exit is not yet an actual exit. According to her, in 2024, it is extremely difficult for foreign companies to sell their Russian assets due to several factors:
- Lack of interested buyers who are not under international sanctions.
- The necessity to sell the business at a 60% discount and pay 35% of the value to the Russian budget as an "exit tax".
- The difficulty of withdrawing funds from Russia due to international restrictions.
- The impossibility of selling Russian business without the permission of Russian authorities.
"In some cases, this requires the consent of Putin himself. What conditions do you have to accept for this? What bribes to give? What else?" explains Agiya, while noting that staying in Russia is even more difficult and more costly for Western companies.
"You cannot buy vegetables and fruits wholesale on the Russian market without having [Ramzan] Kadyrov in the supply chains. So either you lose money now and exit the Russian market, or over time you will lose everything. When we get to the documents and prove that your chain had dealings with Kadyrov's companies."
As Le Figaro writes, Auchan now needs to obtain permission to sell from the Russian authorities and avoid the fate of other foreign companies such as Danone and Carlsberg, whose assets in Russia were effectively nationalized.