Taipei (Taiwan) – Companies flee Russia in large numbers following the invasion of Ukraine. However, Asian brands are conspicuously missing from this corporate exodus.
More than 370 companies worldwide have suspended, withdrawn, or reduced their operations in Russia. The vast majority of these companies are located in Europe or North America. This includes iconic brands like McDonald’s and Shell. Except for a few corporate giants from Japan and South Korea, most Asian brands chose to remain in Russia or stay quiet about their plans, except a few.
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Quitting the market has been communicated in a subdued, subtle way.
Some Western policy analysts have compared Russia’s isolation to South Africa’s exclusion. However, corporate Asia’s muted response raises questions about the universality and ethical determinants of North American and European companies.
Marketing experts believe that there are key differences in the conceptions of corporate social responsibility (CSR), government policy, and public perceptions about the conflict in Ukraine. These factors all affect the calculation in boardrooms throughout the region.
“There’s more caution about the possible repercussions of ‘taking a position’ and managers tend to be more circumspect,” Joseph Baladi (an Australian academic and author of The Brutal truth about Asian Branding) told Al Jazeera. He described Asian brands as being more pragmatic about CSR concerns.The United States announced broad sanctions against Russia last month. It included bans on “cutting edge technology,” which includes components made in the USA and used in many products sold to Asian tech companies.
Many tech companies in Japan, South Korea, Taiwan, and Taiwan spent the next few days poring over the Foreign-Produced direct Product restrictions details to determine if they would have to stop selling Russian products. Some computer manufacturers canceled certain items, complaining in some cases about the fluidity terms such as “dual-use,” but most didn’t proactively withdraw from the market.
South Korea’s Samsung was the exception. It is Russia’s most popular smartphone brand and followed other major US tech brands by pulling out wholesale on March 5.
But unlike Apple, Microsoft, and Intel, who all explicitly condemned the “Russian invasion” when they announced their departure days before, Samsung mentioned “current geopolitical development.” LG, the local rival, announced its departure on Saturday with a similar non-political statement. It expressed concern for “the health and safety of all peoples” and supported “humanitarian relief efforts.”
Large Japanese companies, including automakers Toyota and electronics manufacturers like Panasonic, also blamed apolitical risks such as logistical risks for their decision to cease operations.
Martin Roll, a consultant in brand strategy who advises Asian family-owned businesses and family offices on branding, said that “it tends to be communicated more subtlely, and less aggressively” in Asia.
Roll stated that many of the region’s most prominent brands and business families are involved in philanthropic activities but don’t openly disclose them.
Several of the most prominent brands, while refusing to denounce Russian aggression, nevertheless pledged support to UN agencies and charities in Ukraine.
Others have remained silent. Acer, MSI, and ASUS are all Taiwanese tech companies that declined to answer media inquiries about the matter. According to Taiwan’s Economic Daily News, an unnamed company employee said that brands are afraid that a public withdrawal will offend Moscow and make it more difficult for them to continue operating there in the future.
As the conflict in Ukraine continues, it is becoming harder to maintain neutrality. ASUS, Taiwan’s most well-known international brand, was warned by high-profile political figures earlier this month not to damage Taiwan tech’s image in Russia by staying there after Ukraine’s leaders publicly requested it to leave the market. Soon, the company confirmed that shipments had stopped at an “effective stop,” which was a tacit acknowledgment that it no longer supplies Russia.
Surprise reversals have also been recorded. Uniqlo, a Japanese clothing brand, initially pledged to stay in Russia. They described clothing as “a necessity for life.” However, Uniqlo changed its mind and followed Zara and H&M to the exits.
Baladi stated that most people, including Asian consumers, would have understood Uniqlo’s reasoning as disingenuous.
Even though their primary market is Asia, Uniqlo must be careful about the reputational risk associated with inaction, says Abishur Prakash (a Canada-based geopolitical advisor) and author of The World is Vertical.
Prakash stated that the Ukraine conflict is fluid and that if it gets worse, Western consumers could start targeting Russian companies – placing Asian brands in an awkward situation.
Roll stated that the brand advantage in environmental, governance, and social matters is diminishing as consumers expect corporations to be more proactive and take a stand on issues.
Roll stated that some Asian brands are still learning how to navigate the global landscape and interact with various global consumers. This can be made more difficult by the instantaneous feedback social media provides.
Asian brands’ relatively weak response may reflect different priorities in the region.Even though important US allies like South Korea and Japan have followed Washington’s lead in imposing sanctions against Moscow, most countries in the region declined to support the campaign. Some, such as China and Myanmar, have used the crisis to accuse the US of inciting tensions and conflict.
Prakash stated that the West had long wanted to separate from Russia. With Ukraine, this opportunity has presented itself, and Western companies have followed suit.”
But, Asian companies do not have the same incentive. Their customers or governments are not forcing them to sacrifice revenue. They shouldn’t have to sacrifice revenue unless required.
Gabriele Suder and Sumati Varma are co-authors of Doing Business in Asia. They said that China has a significant influence on calculating the success of businesses in the region.
Suder and Varma explained to Al Jazeera that Asian companies’ responses to China are also determined by how they respond to the competition. In an email, Suder and Varma highlighted India, Indonesia, Malaysia, and Myanmar as countries that have benefited from relations with both Russia and China.
The relative lack of pressure from the public on companies to distance themselves from Russia may also be because they are not close to the conflict.
Prakash stated that it is possible for the Asian consumer not to sympathize with the Ukraine conflict like the American or European consumer. Prakash stated that there is no ‘geographical’ and ‘cultural’ connection. This means that Asian consumers are less likely than Westerners to punish Asian brands for their Russian presence.
Conflict over Taiwan
This raises questions about how corporations will react to a conflict over Taiwan. Officials in China have been closely monitoring the war in Ukraine to learn from the lessons learned and plan for any future military offensives by Beijing, which regards Taiwan as its territory.
Prakash stated that “Asian governments and companies would be more vocal than anyone else.”
Taiwan’s leaders have acknowledged the practical side of their recent sanctions against Russia and public diplomacy support for Ukraine.
“Taiwan was forced to choose,” Vice President William Lai stated earlier this month to local media. “If Taiwan hadn’t joined democratic nations in imposing sanctions against Russia, to whom could we turn if China attacked us?”
It is still unclear whether Western brands would be willing to leave China in the face of an attack on Taiwan. This is partly because they have invested more in China’s market than many Asian companies in Russia.
Baladi thinks brands’ experience with the Ukraine-Russian war has made it possible to pull out of China.
He stated that the war had shown how united Western liberal democracies were in the face …” of aggression. “The Chinese leadership will likely realize that any talk of invading Taiwan will not only be resisted by the world governments but also affect one of the most important drivers of their economy, global consumers.
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