The massive boycott and withdrawal of multinational companies from the Russian market due to the war against Ukraine have marked a turning point in the relationship between business and geopolitics.

According to UDN, business decision-makers and experts have started to discuss how to respond to the next possible major retreat, which means boycotting China.
After stern economic sanctions and a business blockade imposed on Russia, 400 global firms have pulled out of Russia or suspended operations in less than four weeks, and the number is growing, as the Financial Times informed.

Some companies fear customer backlash, while others do not want to be caught by sanctions.

In a letter to 40.000 global employees, David Solomon, CEO of Goldman Sachs, said to 40.000 global employees, “Our hearts are with the Ukrainian people.”
Chris Kempczinski, president of McDonald’s, wrote in an open letter, “As a system, we join the world in condemning aggression and violence and praying for peace.”

Witold Henisz, Professor of Management at the University of Pennsylvania’s Wharton School, said that one of the most pressing questions in boardrooms following the Russian invasion is, “What would happen if we have to pull out of China?”

In this scenario, the risks of doing business in China also increase. However, it will be more difficult for companies to withdraw from China. Few companies are willing to analyze the risks and outweigh the benefits when dealing with the world’s largest importer and exporter of intermediate goods.

U.S. President Joe Biden warned Chinese President Xi Jinping that there would be “consequences” if Beijing were to help Moscow.

Beijing’s military invasion of Taiwan would be the tipping point too. However, experts do not think that is going to happen.

The Financial Times recently reported that corporate lawyers such as Dan Harris of US-based Harris Bricken advise clients to consider “asset-light” solutions such as licensing or franchising. Diversification of manufacturing elsewhere in Asia, or perhaps further afield, should be a priority at the very least.

According to the Foreign Policy, the loss of revenues in Russia is a tolerable sacrifice for most companies.

Take Apple as an example. This tech giant loses iPhone sales at a rate of only about 3 million dollars per day. The losses would be much higher if Apple lost access to China.

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