Business as usual for the French firms ignoring Russia boycott - by Oliver Gill for the Telegraph

Some are even looking to expand in Russia after the exodus of US and UK competitors


This article by Oliver Gill dated 20.03.22, Chief business correspondent for the Telegraph begins with these words:


At 83-years-old, Gérard Mulliez was still up for the fight. The patriarch of one of France’s wealthiest families barged through the doors of the local Lille Communist party headquarters.


Pointing at a poster that labelled him a “Profiteur de la crise” in 2015, he said: “You are not very nice to me… I create jobs with my stores.”


“It’s ideological gibberish,” Mulliez exclaimed, according to witnesses reported in local media, after a local claimed workers across his empire were being exploited at the expense of enhancing his family’s vast wealth. With that, he turned on his heels, got into his Range Rover and sped off.


Supermarket giant Auchan is central to Mulliez's network of business interests. Dubbed France’s answer to Walmart, he launched the company in 1961 after meeting the founders of Carrefour and Leclerc. Auchan now operates in 13 countries, employs nearly 180,000 people and generates €32bn of annual revenue.


Among Association Familiale Mulliez (AFM)’s other brands are sports chain Decathlon and Leroy Merlin, one of the world's biggest DIY chains.


Now approaching his 91st birthday, Gerard Mulliez could be expected to take a backseat. But while Barthélémy Guislain, 48, has been chief executive since 2014, the Mulliez family wields absolute power behind the scenes.


AFM is using that power to in effect back the Kremlin as it ramps up some operations in Russia. It comes as many French companies remain in Russia, while many of their US and UK competitors pledge to withdraw from the country.


Oil major Total Energies is clinging on to its 20pc stake in Russian state-controlled gas producer Novatek, while Danone is also continuing to operate in Russia, which represents around 6pc of its annual revenues - with boss Antoine de Saint-Afrique telling the Financial Times: “We have a responsibility to the people we feed”. The world's largest yoghurt maker said it was suspending investment in the country and would continue to monitor how the situation evolves.


At AFM, Auchan employs 41,000 people across 311 stores in Russia, generating around a tenth of the chain’s turnover. Leroy Merlin operates across 112 locations which account for nearly a fifth of the €3bn it generates in sales. Decathlon has 60 stores in the country.

All three are continuing to operate in Russia despite Vladimir Putin’s attack on Ukraine.


But Leroy Merlin is going one step further. According to a one-page letter sent to Russian suppliers on March 11, seen by the Telegraph, the DIY chain is far from curbing operations. Instead, it views Russia's war economy as an opportunity to expand.


Eric Poulet and Anna Goncharova, deputy general manager of Russia and commercial director, respectively, wrote: “In spite of any rumours, we are continuing our work and do not plan to stop the activity of our company.


“Through this week, you received a significant increase in the number of orders from us in connection with the fact that our sales have significantly increased.”


Leroy Merlin says it will consider requests to increase costs from suppliers, with inflation in Russia at its highest level for two decades, but “baseless inflation” will not be tolerated.


Bosses at Leroy Merlin suggested that opportunities abound from Moscow’s wartime economy, as non-Russian rivals pull out amid sanctions.


“Since the disappearance of certain companies from the market, we are open to your proposals on the increase of supply and the increase of your assortment of products,” the letter reads.


The company has set up an "import substitution department", according to the letter, which adds: “In the next three to four months we plan to fully replace imported products with those produced in Russia.”


While Leroy Merlin’s approach is extreme compared with other French businesses, many others have taken a less aggressive approach to exiting Russia compared with the likes of the UK and US.


No less than 35 companies from France’s blue-chip CAC 40 index remain active in Russia, according to a French media report. It could be argued corporate France has largely followed President Emmanuel Macron’s lead in trying not to inflame Putin and his cronies.


On a political level, Macron has repeatedly attempted to play peacemaker. While condemning the Kremlin, he was at pains to stress that France was not in a military conflict with Russia earlier this month. “There is a war on the ground, but we are not at war,” he said, following a meeting of EU heads of state at the Palace of Versailles.


While luxury goods maker LVMH, spirits maker Pernod Ricard, and Air France have suspended operations amid criticism of the Kremlin, shipowner CMA-CGM reportedly halted services to Russian ports “for the sake of security” rather than exerting pressure on Moscow.


Oil major Total was last week criticised by the Church of England, which owns a small share. Total, which boasts a market value of €120bn, has a 19.4pc stake in Novatek as well as joint ventures with the business.


“Remaining a shareholder in a strategically significant national entity that is generating returns for a country to continue war, is highly questionable,” said Adam Matthews, chief responsible investment officer at the Church of England Pension Board.


While Total denounced the hostilities at the start of March - and said it would no longer make new investments in the country - it stopped short of saying it would exit Russia.


In comparison, British rivals BP and Shell also held significant interests in Russia but, under pressure from Business Secretary Kwasi Kwarteng, pledged to offload them shortly after Putin’s invasion.


Perhaps crucially, a similar direction has not come from the Macron administration, according to Total’s boss Patrick Pouyanné. Following the statement on March 1, he told a conference he was not under pressure from the “highest authorities” in France to exit Russia.


Pouyanné could yet cave: Total last week agreed to exit energy assets in Myanmar, following a campaign by US activist investor Coast Capital.


The prospects are less likely for the Mulliez business empire, however. AFM, Auchan, Leroy Merlin and Decathlon either declined to comment or did not respond to questions about their rationale for remaining or expanding in Russia.


For the likes of Ukrainian MP Lesia Vasylenko, who says every rouble spent in Russia is funding bullets that kill children, the French company's silence is deafening.


https://www.telegraph.co.uk/business/2022/03/20/business-usual-french-firms-ignoring-russia-boycott/


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CREDIT: Ruby Martin


Note: As a francophile with a large family in France, I am shocked and surprised by this article and earnestly hope that President Emmanuel Macron will clamp down on the companies concerned.


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