As the Russian government steps up moves to de facto confiscate assets, Japanese companies are being forced to decide whether to withdraw or continue operating. The decision is becoming increasingly difficult as the risk of losing their long-established local foundations overlaps with concerns that control of their businesses could be taken away.
As the Russian government tightens its control over foreign companies' assets, Japanese companies are caught in a dilemma over whether to withdraw from or continue their operations in the country. Exiting would mean losing their local foundations and incurring substantial losses, while continuing to operate could still result in the loss of management control. In particular, speculation is spreading that Russia's asset confiscations will gather pace.
According to a report by The Yomiuri Shimbun, Ajinomoto President Shigeo Nakamura (中村茂雄) said that he could not immediately decide whether to "give up" the business that Ajinomoto had developed in Russia over many years. Ajinomoto halted local sales immediately after Russia's invasion, but continues to sell agricultural materials and conduct research and development in fermentation technology. The impact of a withdrawal is a concern in view of the market for its core products, including mayonnaise.
A study by Yale University in the United States estimates that as many as 65 Japanese companies are based in Russia. It suggests that Russia allows companies from unfriendly countries to dispose of their assets at no more than 40% of market value and requires them to pay the government an amount equivalent to 35% of market value.
Experts say that Japanese companies may be unable to avoid substantial losses even if they choose to withdraw. As the Russian government expands temporary administration, companies are being called on to make decisions that balance the continuity of their local operations against the avoidance of losses.