Ukraine invasion: Why global companies are putting profit at risk and racing to get out of Russia

Major companies are heading for the exit en masse, with Coca-Cola and McDonald's the latest to cease operations following Russia's invasion of Ukraine.

McDonald's announced on Wednesday it would close its 850 outlets in Russia but would continue paying salaries to its 62,000 employees.

"When McDonald's moved into the Soviet Union, it was part of a message of opening up and building trust and co-operation between Russia and the West. And now those avenues have all been closed off," University of Massachusetts political science assistant professor Paul Musgrave told Newshub.

Global giants like Carlsberg, Ford, Ikea, Nintendo, Starbucks, even Twitter are all also suspending shipments or operations.

"It's not going to be something Russian consumers, or even more importantly, Russian political leaders, are going to quickly forget," Musgrave says.

In fact, it's more about who remains. Yale University has been publishing the names of companies still doing business, like 3M and Nestle.

It's a list some won't like being seen on, and time is running out to make a move.

"If you're a late adopter of a kind of economic pullout sanction, then you're clearly more motivated by what the zeitgeist is at that moment, what others have done," Auckland University marketing lecturer Bodo Lang says.

"So I think if you're front footing it as a company, that sends a clear message that you're actually taking this to heart."
The sanctions are piling up and putting pressure on Vladimir Putin.

"Mr Putin has miscalculated. He and his inner circle believed the West was failing and lacked the resilience and the willpower, and he probably thought he could have his cake and eat it," says University of Otago international relations professor Robert Patman.

"Leaders need people around them to challenge them. Unfortunately with dictators, they don't like that sort of robust advice. So I think he may be a victim of living in a bit of an echo chamber."

Lang says companies want to be seen to be doing the right thing, especially when there's no moral ambiguity.

"Maybe when you have sponsorship cases when an athlete is found to be misbehaving and a key sponsor is pulling out, but obviously that's on a much much smaller scale. So this global pullout by major brands across all sorts of sectors is really unprecedented," Lang explains.

Patman says companies are unlikely to return unless there's a change in leader.

"McDonald's has curtailed its operations but it's continuing to pay its employees in Russia, which is a signal, I think, that should there be a change of government in Russia, they're all ready to resume."

Lang believes the time away from the Russian market will cause companies to prioritise values over profits before they re-enter.

"There's an aggressor, and there's a victim, and I think the global community, commercially and otherwise, can clearly see there's no ambiguity, and so, therefore, commercial realities are being put second. People are following what their values are saying," Lang says.

But Patman warns the mass corporate pullout could have implications for Putin's campaign in Ukraine, and force him into a dangerous corner.

"There's tremendous pressure on him to wrap up this operation as soon as possible, which may mean that it becomes increasingly frenetic, and also indiscriminate," says Patman.

A reminder that there's much more at stake than beers and Big Macs.

Watch the full story above.