As Global Brands Avoid Russia, Asian Firms Avoid Controversy | Business and Economy News

Taipei, Taiwan – While companies are leaving Russia in droves following the invasion of Ukraine, Asian brands have been conspicuously absent from the corporate exodus.

Of more than 370 global companies that have withdrawn, suspended or scaled back operations in Russia, the vast majority are headquartered in Europe or North America, including iconic brands such as McDonald’s, Shell, Nike and Apple. With the exception of a handful of giants from Japan, South Korea and Taiwan, Asian brands have largely chosen to stay cautiously in Russia or keep quiet about their plans.

Those who exited the market communicated their decision lukewarmly and discreetly.

While some Western political analysts have justified Russia’s isolation with comparisons to the ostracism of apartheid South Africa, the muted response from Asian companies has raised questions about the universality of ostensible ethical considerations. and reputation influencing North American and European companies.

Major differences in conceptions of corporate social responsibility (CSR), government policy and public perceptions of the war in Ukraine all affect the calculus of corporate boards in the region, according to marketing experts.

“There is more caution about the potential repercussions of ‘taking a stand’ and as a result managers tend to be more circumspect,” said Joseph Baladi, an Australia-based academic and author of The Brutal Truth about Asian Branding, to Al Jazeera, describing Asian brands are generally more pragmatic on CSR issues.

McDonald’s is among hundreds of major brands that severed ties with Russia following its invasion of Ukraine [File: Luke Sharrett/Bloomberg]

When the US announced sweeping sanctions against Russia last month, it announced a ban on ‘advanced technology’ which includes US-made components used in many products sold by Asian tech companies. .

In the days that followed, dozens of tech companies in South Korea, Taiwan and Japan pored over the details of the restrictions on direct products made overseas to decipher whether they would be forced to stop selling products. to Russia. While some computer makers have canceled shipments of certain items — in some cases complaining about the fluidity of terms such as “dual-use” — most have not proactively pulled out of the market.

The only exception was South Korea’s Samsung, Russia’s leading smartphone brand, which followed major US tech brands in withdrawing wholesale on March 5.

Yet unlike Apple, Microsoft and Intel, who all specifically condemned “the invasion of Russia” when announcing their release a few days earlier, Samsung simply cited “current geopolitical developments.” Local rival LG announced its exit on Saturday with an equally apolitical statement, expressing concern “for everyone’s health and safety” and support for “humanitarian relief efforts”.

Major Japanese companies, from automakers like Toyota to electronics brands like Panasonic, have also cited non-political factors such as “logistics risks” as a cause for shutting down business.

“In Asia it tends to be communicated in a more subtle and less activist way,” Martin Roll, a branding consultant who advises Asian family businesses and family offices, told Al Jazeera.

Roll said many big brands and business families in the region engage in philanthropic activities but tend not to openly advertise them.

Indeed, several of the high-profile brands that have refrained from speaking out against Russian aggression have nonetheless followed their Western counterparts in making promises to UN agencies and charities working in Ukraine.

To shut up

Other companies simply kept silent. Taiwanese tech brands ASUS, MSI and Acer all declined media inquiries on the issue. Writing in Taiwan’s Economic Daily News, an employee of an unnamed company reportedly said the brands feared a very public withdrawal would offend Moscow, making it difficult to operate there in the future.

But as the conflict in Ukraine rages on, neutrality is becoming increasingly difficult to maintain. Earlier this month, ASUS, one of Taiwan’s best-known international brands, was warned by several high-profile political figures not to tarnish the image of Taiwanese tech by staying in Russia after leaders Ukrainians have publicly asked him to leave the market. The company quickly confirmed that shipments were at an “effective halt”, in a tacit acknowledgment that it was no longer supplying the Russian market.

There were also some surprise turnovers. Japanese clothing brand Uniqlo initially vowed to stay in Russia, describing the garment as “a necessity of life”, before changing course and following Zara and H&M to releases.

“Most people – including Asian consumers – would have interpreted Uniqlo’s reasoning as dishonest,” Baladi said.

Even though their primary market is in Asia, brands like Uniqlo need to be wary of the reputational risk of inaction, according to Abishur Prakash, a Canada-based geopolitical adviser and author of The World is Vertical.

“Because the conflict in Ukraine is fluid, if the situation escalates, Western consumers could start targeting companies that have not severed ties with Russia, putting Asian brands in a difficult position,” he said. Prakash at Al Jazeera.

Roll said the edge once enjoyed by brands that led on environmental, social and governance issues is fading, as consumers expect all companies to take a stand and even be proactive on issues.

“Some Asian brands are still learning how to navigate the global landscape and interact with a diverse group of global consumers,” Roll said. “The almost instantaneous feedback from social media can make this more difficult.”

Hua Chunying
Chinese Foreign Ministry spokeswoman Hua Chunying accused the US of ‘raising tensions’ and ‘sowing panic’ in Ukraine [File: Thomas Suen/Reuters]

The relatively subdued response from Asian brands may also reflect the differing priorities of governments in the region.

Although crucial US allies such as Japan and South Korea have followed Washington in imposing sanctions, most countries in the region have refused to join the pressure campaign against Moscow. Some, including China and Myanmar, have used the crisis to accuse the United States and its allies of stoking tensions and conflict.

“The West has long wanted to dissociate itself from Russia…with Ukraine, this opportunity has presented itself, and Western companies are following suit,” Prakash said.

“But Asian companies don’t have the same incentive. They are also not pressured by their governments or their customers. Why should they sacrifice income unless they have to? »

Gabriele Suder and Sumati Varma, co-authors of Doing Business in Asia, said China is another factor influencing business calculus in the region.

“The response of Asian companies is also determined by their need to face and respond to competition from China, in which Russia has been their partner in many ways,” Suder and Varma told Al Jazeera in an email. -mail, highlighting Indonesia, Malaysia, Myanmar, Vietnam and India as economies that have benefited from ties with Russia and China.

The lack of proximity to the conflict may also explain the relative lack of public pressure on companies to distance themselves from Russia.

“It is possible that the Asian consumer does not understand the Ukrainian conflict in the same way as the European or American consumer,” Prakash said. “This ‘geographical’ or ‘cultural’ connection does not exist. And that means Asian consumers are less likely to pressure or punish Asian brands over their Russian footprint.

Conflict over Taiwan

It raises questions about the likely corporate reaction to a dispute over Taiwan, where officials are watching the war in Ukraine closely to learn lessons about how to respond to any future military offensive from Beijing, which sees the self-governing island as a his territory.

“Asian businesses and governments would be more vocal and shaken than everyone else,” Prakash said.

Taiwan’s leaders have acknowledged the pragmatic side of their recent sanctioning of Russia and public diplomacy efforts supporting Ukraine.

“Taiwan had no choice,” Vice President William Lai told local media earlier this month. “If Taiwan hadn’t joined democratic nations in imposing sanctions on Russia, who would we turn to if China attacked us?”

The question remains whether Western brands would voluntarily leave China in the event of an attack on Taiwan, not least because they invest much deeper in the Chinese market than most Asian companies are in Russia.

Yet Baladi believes the brands’ experience in the Ukraine-Russia war also made it easier for them to pull out of China.

“The war has revealed how united Western liberal democracies are in the face of aggression…” he said. “Chinese leaders are likely realizing that talk of an invasion of Taiwan will not only push back world governments, but also one of the most important drivers of their economy – global consumers.”

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