The economic and financial issues related to the crisis in Ukraine are in the spotlight. More than 500 French companies and their subsidiaries are active in Russia, a country with which relations in the Ukrainian file have become quite tense. As new Western sanctions against Moscow have been announced, Paris and a number of economic players are talking about a risk that remains very measured for French groups. Overview of this presence in Russia and the problem.
According to the French Ministry of Economy, more than 500 French companies, including 35 CAC 40 groups, are active in Russia. On its website, the Franco-Russian Chamber of Commerce and Industry reports “more than 400 members”. In the context of Covid-19, exports to Russia reached EUR 5.2 billion in 2020, making Russia the 7th largest market for France outside the European Union, according to Bercy.
France, first foreign employer in Russia
Within these exports on the one hand means of transport and on the other hand chemical products, perfumes and cosmetics took a prominent place, with 24.3% and 21.4% of the total respectively.
According to the French Ministry of Economic Affairs, France is also the largest foreign employer in Russia with about 160,000 employees. In terms of trade balance, however, Paris has a trade deficit that qualifies as “structural” with Moscow, at 566 million euros in 2020, due to the weight of energy imported.
“France exports less than 7 billion euros a year to Russia”, or “barely more than 1% of French exports”, confirmed the economy minister Bruno Le Maire.
If foreign direct investment (FDI) remains at a “high level”, France owes it mainly to the TotalEnergies group, according to Bercy. In 2014, this presence tragically made headlines when the group’s CEO, Christophe de Margerie, died in a plane crash in Moscow. To date, TotalEnergies participates in particular in two projects aimed at the production of liquefied natural gas (LNG), namely Yamal and Arctic LNG2. However, the latter should only start in 2023.
Russia, Renault’s second largest market
Russia is an important market for two other large French companies: Renault and Société Générale. For the carmaker, it is the second largest market in the world, with almost 500,000 vehicles sold in 2021 through its subsidiary Avtovaz (€2.8 billion turnover in 2021). “We are following this very closely,” admitted Renault general manager Luca de Meo. “But our Avtovaz business sells 90% on the Russian market. (…) And these are very local products,” he said.
Societe Generale is present through its subsidiary Rosbank (12,000 employees), a heavyweight in the Russian banking sector.
On the services side, there is the Accor hotel group, the Auchan distributor and the Decathlon brand (sports equipment). But also Bonduelle (agrifood) or Alstom, which owns 20% of the railway manufacturer Transmashholding.
Engie, a stakeholder in the Nord Stream 2 gas pipeline project
On his website, Bercy notes that France’s “market share” has remained stable in recent years despite “several sets of US and European sanctions” already linked to Ukraine’s dossier. Bruno Le Maire reiterates that in the current crisis the consequences will be “limited”, because “the French economy is not very exposed”.
Energy group Engie, a stakeholder in the Nord Stream 2 gas pipeline program, declined to comment following Germany’s decision to suspend the project. Earlier this month, the company’s CEO Catherine MacGregor defended its importance, saying a Russian-Ukrainian conflict would be “bad news” from that perspective.
For the rest, French companies often want to be reassuring and also claim low exposure. EDF “normally will continue to trade with Russia, but at the low level that is its own,” CEO Jean-Bernard Lévy told France Info.
Fear for the agricultural sector
Danone – “Russia will represent about 5% of our revenue in 2021” – and Pernod Ricard are on the same page. Auchan is also “extremely attentive” and “mobilized” for its 40,000 employees in Russia but also in Ukraine. However, the company says it does not believe in economic consequences.
A notable exception, at the FNSEA, the largest agricultural union, President Christiane Lambert spoke of BFM Business on a “topic of great concern”, recalling that the sector had been the first “target” by Moscow in 2014.
With Rosbank, a subsidiary with a turnover of more than 600 million, Societe Generale seems vulnerable. But his activity “is mainly local and we have every confidence in it,” replied AFP, an official of the French bank.
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