American Companies Thriving In Russia: Is There Something To Be Ashamed About?

05 August 2016

Kenneth Rapoza / Forbes

The skyscrapers of Moscow city stand beyond construction work on Novy Arbat street in central Moscow on Wednesday June 22, 2016. Ever since the Democratic National Committee blamed Russia for hacking its email server, it’s painted challenger Donald Trump as a villain for allegedly having business ties with Russians. What’s so bad about having business ties with Russians? (Photographer: Andrey Rudakov/Bloomberg)

Ever since the Democratic National Committee decided to turn their disdain for Bernie Sanders into disdain for Russians and Donald Trump, the New York billionaire has been seen as being in bed with Russian oligarchs and longing to cut deals in Moscow. Since when was it so bad to want to do business with the Russians?

It’s politically correct to hate on Russia these days.  To like Russia even a bit means you support Vladimir Putin,  or are impressed by the Russian mafia and probably hate polar bears, or something.

If it is so bad to do business with the Russians, or even want to do business with the Russians, then maybe these companies should cut and run before the righteous threaten them with boycotts or defame their name in the press.

Here’s who’s doing business with the bad guys.

On July 13, Pfizer closed a joint venture agreement with Russian pharmaceutical company NovaMedica.

Boeing has been in Russia for decades. About five years ago, it announced plans to invest $27 billion over the next 30 years. In July 2015, an agreement was signed between Russian titanium manufacturer VSMPO-Avisma Corporation, Boeing and the Ural Federal University for joint research and development projects.

Ford has been in Russia for 13 years. In April 2015, the joint Russian-American venture Ford Sollers launched the production of the Ford Transit. The American brand launched four new vehicles in Russia last year, including the Focus and Fiesta models sold here.

Apple and Google like him. Artem Kuharenko, co-founder of NTechLab in Moscow. His app, FindFace, has been downloaded for free more than a million times on Apple and Android since February, allowing users to identify strangers from their smartphone cameras. (Photographer: Andrey Rudakov/Bloomberg)

U.S. companies with an existing presence in Russia include, PepsiCo PEP +0.10%, Procter&Gamble, McDonald’s, Mondelez International, General Motors, Johnson & Johnson, Cargill, Alcoa, and General Electric. GE recently signed a joint venture with oil firm Rosneft  in expectation that Washington will actually one day lift sanctions on oil firms.

Morgan Stanley, not Trump International, is ayuuuuge American investor in Russian real estate, according to Knight Frank. In April, a fund controlled by Morgan Stanley began negotiations to acquire several shopping centers in Moscow. That same month, their real estate investing fund acquired the Metropolis in Moscow for $1.2 billion from Capital Partners, a Kazakhstan developer.

American retailers continue to develop their businesses in Russia. They are not sanctioned to do so. Many new American brands entered the Russian market over the last two years, including Forever 21 and Crate & Barrel in 2014.

Forever 21 must hate America and love Putin. It set up shop in the MEGA Teply Stan Mall in Moscow in 2014. (Company photo)

Forever 21 must hate America and love Putin. It set up shop in the MEGA Teply Stan Mall in Moscow in 2014. (MEGA Teply company photo)

American food companies have been expanding, even while Russia was busy annexing parts of Ukraine real estate, and arming rebels in the Donbass for which it was sanctioned in 2014. Last year, Starbucks opened its 100th store in Russia.  Krispy Kreme opened its first store in 2013. It now has five.

According to a New York Times article from April 2015, even the Clinton Foundation liked Russians as recent as 2013. The Russian state owned atomic energy firm Rosatom acquired Uranium One in three separate transactions from 2009 to 2013, Canadian records show, and thanks to recommendations by Hillary Clinton, a $2.35 million donation was made to the Foundation run by her and former president Bill Clinton, the New York Times reported.

In other words, the Russians can’t be all that bad.

Sure, not everyone wants to be in Russia. Not everyone needs to be in Russia. Carlyle Group’s billionaire CEO David Rubenstein told Bloomberg TV in October that it was too risky. He’s out.

U.S. private equity firm Blackstone left in Sept 2014, two months before the ruble went from around 35 to the dollar to 75.

Ask luxury real estate brokers in New York if they’ll turn away a Russian buyer because, well, he harbors from a nation run by oligarchs and, gulp, Putin, orPutler as he is referred to by some.

The most expensive New York condo went for $100.5 million in 2014 to an undisclosed buyer. That’s the penthouse in the 90-story One 57 West high-rise where many owners are wealthy Russians. Another high-profile sale in 2011 of an $88 million penthouse at 15 Central Park West went to a Russian buyer.

London isn’t nicknamed Londongrad for nothing. Its prime real estate is overrun by Russians. Ask London real estate developers if they think selling property to Russians is bad business.

Trump claims he does not  have any business in Russia. But Morgan Stanley, which donated $148,660 for Hillary’s 2008 run at the presidency, according to Open Secrets, might tell the Donald, “maybe you should.”



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