"Don Tteilla"... Russia's Economic Sanctions on Korea Expected to Impact Samsung and Hyundai Motor (Comprehensive)

Russia's Ruble Debt Repayment Measures
Remittance Blocked, Adding to Troubles
Prolonged Issues and Additional Sanctions Increase Challenges for Domestic Companies

[Image source=Yonhap News]

[Asia Economy Reporters Jin-ho Kim, Min-young Kim] Domestic companies trading with Russia, such as Samsung Electronics, Hyundai Motor, and LG Electronics, are on high alert due to the impact of sanctions against unfriendly countries. With remittance routes already blocked, Russia has taken measures requiring debt repayment in rubles, whose value has plummeted, leaving related companies caught in the crossfire like "shrimp caught in a whale fight."

According to the business community on the 8th, about 40 domestic companies and associations currently operating or trading in Russia are closely monitoring the effects of Russia's sanctions against unfriendly countries and are carefully considering their responses.

Earlier, on the 7th (local time), Russia included South Korea and others in the list of countries that have taken unfriendly actions against Russia. The first measure against unfriendly countries is economic sanctions. For foreign creditors included in the unfriendly countries list, the Russian government, companies, local governments, and individuals with foreign currency debts are allowed to repay those debts in rubles.

The problem is that the ruble's value has been plunging to record lows daily since Russia's full-scale invasion of Ukraine. In particular, there are concerns that, due to Russia's exclusion from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), receiving debt repayments in rubles itself is difficult.

For Korean companies operating locally or exporting products to Russia, significant restrictions on business activities are expected, and realistically, receiving export payments has become even more difficult.

Domestic companies such as Samsung Electronics and LG Electronics are not expected to suffer major damage or operational difficulties immediately, but they are paying close attention to the aftermath of the situation and the possibility of additional sanctions. An industry insider said, "Since the Russian market accounts for a small proportion of the global market, there will be no immediate major damage," but added, "If the situation prolongs or additional sanctions are imposed, they will inevitably be affected." Another industry source said, "Since remittances have been suspended and additional measures have been taken, there will be more difficulties related to payments."

In Russia, more than 40 companies, including major corporations such as Samsung Electronics, LG Electronics, and Hyundai Motor, have established operations. Samsung Electronics produces TVs at its factory in the Kaluga region near Moscow, while LG Electronics manufactures home appliances and TVs at its factory in the Ruza area on the outskirts of Moscow. Samsung Electronics currently holds the number one market share in Russia's smartphone and TV markets, and in the home appliance sector, including washing machines and refrigerators, LG Electronics competes closely for the top share. Hyundai Motor and Kia operate a factory in Saint Petersburg.

Meanwhile, domestic construction companies operating locally are also closely monitoring the situation. Companies such as DL E&C, Hyundai Engineering, and Samsung Engineering have secured local projects in Russia and are carrying out business. The impact of losses due to the ruble's depreciation varies depending on the currency in which each company contracted. For example, DL E&C, which secured the Baltic Complex project at the end of last year, contracted in euros.

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