Korean Companies Cautious Amid Russian Pressure... "A Market We Cannot Give Up"

Apple and Other Global Companies Announce Successive Withdrawals from Russian Market
Meanwhile, Korean Companies 'Closely Monitoring' the Situation First
Many Russian Factories and High Sales Proportion Pose Significant Practical Challenges

[Image source=Yonhap News]

[Asia Economy Reporter Jin-ho Kim] In relation to Russia's full-scale invasion of Ukraine, while major global companies are consecutively declaring 'de-Russification,' Korean companies appear hesitant about direct or indirect involvement. This is analyzed to be because they cannot realistically ignore the sales proportion in Russia, making it difficult to hastily join Western sanctions.

According to the industry on the 2nd, Apple completely stopped selling products in Russia starting from the 1st (local time). Apple's decision is a response to Russia's invasion of Ukraine. Earlier, Ukrainian President Volodymyr Zelensky had requested comprehensive assistance from global companies to pressure Russia.

Apple also restricted its payment service Apple Pay in Russia and prevented downloading Russian media apps such as RT News and Sputnik News from the App Store.

Major IT and energy companies have also taken steps toward 'de-Russification.' Leading 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 commercial activities on its platform.

However, unlike major Western companies, Korean companies seem somewhat reluctant to engage in direct or indirect pressure on Russia.

Major domestic companies such as Samsung Electronics and LG Electronics are not considering sales bans or humanitarian aid to Ukraine as measures to pressure Russia. For now, the priority appears to be closely monitoring the situation. 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.

The reason these companies cannot hastily join Western sanctions is largely due to the significant sales proportion in Russia. 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 realistically difficult to participate in sanctions. An industry official in the home appliance sector said, "Simply participating actively in Western sanctions compared to companies like Apple could cause significant damage, so this issue is a difficult one."

The situation is similar in the automotive industry, which accounts for more than 25% of Korea's exports to Russia. Especially Hyundai Motor has maintained loyalty during Russia's difficult times 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 consecutively stopped exports to Russia. However, since these companies have a negligible sales proportion in Russia, the industry consensus is that the risk is not as significant as for companies like Hyundai Motor.

This content was produced with the assistance of AI translation services.