Global Companies like Apple and Intel 'Exit Russia'... Will Korean Companies Join Russia Sanctions?

Global Companies Announce Sales Suspension and Withdrawal One After Another
Samsung Electronics Also Halts Shipments to Russia...Donates $6 Million
Korean Firms Have Many Factories and High Sales Share...Withdrawal Faces Significant Practical Challenges

[Image source=Yonhap News]

[Asia Economy Reporter Jin-ho Kim] Global major companies such as Intel and Apple have successively declared their 'exit from Russia.' They have completely halted the sale and shipment of all products to condemn Russia's full-scale invasion of Ukraine.

Accordingly, attention is also focused on whether Korean companies such as Samsung Electronics, LG Electronics, and Hyundai Motor will join the sanctions against Russia. Since the sales proportion in Russia cannot be realistically ignored, it is more likely that they will provide indirect support through donations on a humanitarian basis rather than hastily withdrawing.

According to major foreign media and business circles on the 5th, Intel announced the day before that it would completely stop selling products to Russia and Belarus. In a statement, Intel emphasized, "We condemn Russia's invasion of Ukraine" and "urge an immediate end to the war and a swift return to peace."

Earlier, Apple also completely stopped selling products in Russia from March 1 (local time). Apple also restricted its payment service Apple Pay in Russia and prevented downloading of Russian media apps RT News and Sputnik News from the App Store.

Major IT and energy companies have also taken steps to 'exit Russia.' Major energy companies such as Shell, British Petroleum (BP), and Norway's Equinor recently declared their withdrawal from Russia. Meta, which operates Facebook, also banned accounts of Russian state media from advertising or engaging in commercial activities on its platform.

Previously, Ukrainian President Volodymyr Zelensky requested comprehensive assistance from global companies to pressure Russia.

Korean companies are also expected to prepare indirect support measures such as donations for Ukraine. According to Reuters on the same day, Samsung Electronics has stopped shipping goods to Russia. It will also donate $6 million (about 7.3 billion KRW) for Ukrainian refugee relief. According to reports, Samsung Electronics issued a statement saying, "We are closely monitoring the current complex situation and will decide on the next steps."

However, unlike other global companies such as Apple, it is reported that direct measures such as withdrawal are realistically difficult. This is because there are many local factories, making it practically challenging to participate in sanctions.

LG Electronics produces home appliances and TVs at its factory located in the Luzha area on the outskirts of Moscow. It also operates a sales corporation in Ukraine. Samsung Electronics produces TVs at its factory in the Kaluga region near Moscow. Samsung Electronics and LG Electronics hold the number one position in major home appliance sectors such as washing machines and refrigerators in Russia. Samsung Electronics' smartphones have a 30% market share in Russia, ranking first.

In particular, while Apple does not have local factories in Russia, Samsung Electronics and LG Electronics have many local factories, making it inevitably difficult to participate in sanctions. An official from the home appliance industry said, "Simply participating actively in Western sanctions compared to companies like Apple could cause significant damage, so this issue is complex."

The situation is similar in the automobile industry, which accounts for more than 25% of Korea's exports to Russia. Especially Hyundai Motor has maintained loyalty during difficult times in Russia in the past and holds a high market share locally, making it difficult to join Western sanctions. Accordingly, Hyundai Motor emphasizes that the suspension of operations at its Saint Petersburg plant in Russia until the 5th is due to 'parts supply shortages' rather than participation in Western sanctions.

As Western sanctions against Russia intensify, global automakers such as Volkswagen, Volvo, and GM have successively stopped exports to Russia. However, since these companies have a negligible sales proportion in Russia, the industry consensus is that their risk is not as significant as that of Hyundai Motor and others.