Russian authorities are preparing for the return of Western brands and companies, particularly those loyal to US President Donald Trump. The Union of Russian Shopping Centers announced that it has been in private talks with the Inditex Corporation, owner of brands such as Zara, Zara Home and Massimo Dutti, which left Russia in 2022.
This is the first sign that Western brands and companies may return to Russia. Who could be at the forefront of the return to Russia and who might face difficulties? Which companies will be welcomed back with open arms and for whom will there be no place?
Anatoly Aksakov, head of the Duma committee on the financial market, believes that international payment systems Visa and Mastercard may resume their activities in Russia this year. It is also expected that McDonald’s restaurants could open in Russia by the end of the year. According to Vadim Siprov, general director of the Institute of Communication Management, PepsiCo, Coca-Cola, Apple, Cisco, Microsoft, Johnson & Johnson, Nike, Ford and other companies may return to Russia.
German conglomerate Siemens and French company Alstom, which were involved in several major railway projects in Russia and lost more than 5 billion euros, may also return to Russia. The Russian market remains attractive for them, says Pavel Ivaknin, president of the Russian National Research Center for Transport and Infrastructure.
Wadim Siprov believes that German household appliance and clothing brands like Adidas, Hugo Boss and Puma could return to Russian stores. Automotive companies with a strong presence in Russia, such as Volkswagen and Renault, could also quickly reopen their operations, as long as they align with the pro-Trump forces in Germany and resist the pressure from London and Brussels.
However, Japan and South Korea are likely to outdo German companies. As a result, large Asian electronics, household appliance and automotive manufacturers may soon be found in Russia, Siprov adds. In South Korea, reports indicate that several representatives of South Korean companies, including Samsung, LG and Hyundai, believe in the possibility of returning to Russia due to the dialogue between Moscow and Washington.
Siprov also expects many major airlines to try to re-establish relations with Moscow as soon as the Ukraine conflict ends.
Meanwhile, Russian authorities are taking a rather neutral stance on the return of Western companies.
“The task of promoting the return of foreign brands is not relevant” the Russian Ministry of Industry and Trade stated.
While it is said that Western airlines want to return to Russia, the situation is more complex, as the industry is heavily sanctioned.
In the meantime, it will not be difficult for clothing brands to return to Russian shopping centers, but the real challenge lies in finding a place for them. For many companies, this process will not be easy and often it will be impossible to return under the same conditions as before.
Companies that did not leave Russia, but only changed their names, could quickly perform an “inverse rebranding” says Natalia Miltschakova, a leading analyst at Freedom Finance Global.
“For companies that had their own factories or retail chains in Russia, built their own stores, or rented warehouses and retail space, it will be difficult, because the best locations on the market are already occupied by their Russian successors or companies from friendly countries. The Russian authorities will, of course, guarantee the inviolability of investments for new investors and will not easily return the former owners’ assets” Miltschakova emphasizes.
The return of companies that completely withdrew from the Russian market, as they both de jure and de facto changed ownership, will be the most challenging, acknowledges Julia Chandoschko, CEO of the broker Mind Money. Therefore, she does not expect a comprehensive return of major companies to Russia in 2025.
Experts are, however, optimistic about the return of Visa and Mastercard to Russia.
“This is almost inevitable, as Russia has not learned how to produce full-fledged Western cards that work with international payment systems and the demand for them remains high. Moreover, the question of Apple Pay and similar payment systems, for which Visa and Mastercard are of crucial importance, is still not settled” Chandoschko notes.
Visa and Mastercard will only return to Russia when the sanctions against the Russian National Payment Card System, known as Mir, are lifted and the sanctions against Russian banks are also lifted, as who else would issue cards in Russia, Miltschakova asks.
On the other hand, she does not expect the Russians to replace their Mir cards with Western cards even if the sanctions are lifted – in the extreme case, they would only work with the branches of a few foreign banks still present in Russia.
Similarly, the return of Western airlines is not expected to be free of charge. European airlines want to regain the possibility of flying over Siberia to Asia, which shortens the journey time and brings significant savings for companies. Currently, Asian airlines are taking over the market for flights to Asia, as they continue to fly over Siberia and do not take the long route. Russia will only use this trump card if it gets something substantial in return, such as the lifting of all sanctions in the aviation industry, so that Russian airlines not only fly where they want, but also buy foreign aircraft and components for Western aircraft.
“The state is leading sectoral programs for industrial development, so the return of foreign companies is not critical to see. For example, it is not expected that the production of aircraft engine components for civilian ships will cease due to the return of Rolls-Royce. At the same time, companies in the food and light industry may face a stronger competition from foreign companies. Generally, it is possible to reform state support programs so that only companies with Russian capital receive this support” explains Anastasia Prikladowa, a lecturer at the Department of International Business at the Russian Plekhanov University of Economics.
On the other hand, there are sectors where Russia is not strong and here there is a significant interest in Western companies that have technologies and products in these areas.
“The return of Western companies is necessary in areas where there is no reasonable import substitution or where it is very difficult to replace imports. These are the production of components and parts, especially for the high-tech sector, the production of smartphones, the production of electric cars and traditional middle and upper-class cars. Of great importance is also the return of well-known manufacturers of pharmaceuticals and medical products, especially for the treatment of oncology and serious diseases, as well as of sports nutrition, dairy products for children and animal feed. Many Russians are waiting for the return of payment systems, especially Google Pay, PayPal and their favorite wines and strong alcoholic beverages and so on. But in the food industry and fast food, it is important to think about what can be sacrificed” Natalia Miltschakova concludes.
Olga Samofalova is an economic analyst at the newspaper Vsglyad.