The Nizhny Tagil Iron and Steel Works in Russia, which is owned by the Evraz Group. The company witnessed a sharp drop in its share price after the Ukraine invasion. (Photo by Donat SorokinTASS via Getty Images)

GlobalData’s Multinational Companies Database contains subsidiary information on 6,186 of the world’s leading multinational companies (MNCs). Just over 300 MNCs have at least one subsidiary in Ukraine, and about one-quarter (27%) of them are US-headquartered. More than half (57%) are based in western Europe. The table below shows the MNCs most exposed to the Russian invasion.

For context, MNC exposure in Ukraine is relatively small. Less than 1% of the 370,320 subsidiaries recorded in our database are established in Ukraine.

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How have MNCs reacted to the Ukraine invasion?

Bunge, a leading agri-food company, and Scatec, a leading renewable power producer, each have ten subsidiaries in Ukraine. Bunge employs about 1,000 people in Ukraine and has has suspended its operations due to the Russian invasion. Scatec opened its fifth solar plant in Ukraine in July 2021 after only entering the Ukrainian market in 2017.

Similar precautions are in place for other companies. Inditex has closed stores, while Henkel has temporarily suspended production and Nestlé has halted the manufacturing and distribution of its products in Ukraine. Most of the companies listed have expressed some form of concern regarding the current situation and are monitoring the progress closely. Some companies such as Raiffeisen Bank International had actually made provisions in 2021 to de-risk their exposure to potential conflict.

Ukraine’s information and communications technologies (ICT) industry accounts for about 5% of its total gross value added. Our Ukraine FDI profile echoes the sector’s importance in terms of inward investment. Software and IT services and communication sectors account for about one-third of the total number of inbound greenfield FDI projects in Ukraine, according to our FDI projects database. Those MNCs with subsidiaries in Ukraine are primarily involved in ICT-related activities.

MNCs with a presence in Russia

Leading MNCs have even more exposure to Russia. Our database shows 759 leading MNCs having 2,225 subsidiaries in Russia. Of these, 222 are US-based companies, with 417 subsidiaries. Although there are only 36 Russian MNCs in the listing, they account for 30% of the total number of subsidiaries. With sanctions being imposed on Russia by a significant number of governments, MNC operations in Russia should become more difficult. Dutch-registered Yandex and British-registered Evraz, who are both primarily active in Russia, have witnessed sharp falls in share prices since the invasion began.

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What does this mean for Ukraine?

No one can predict the outcome of the invasion at this moment in time. However, we know that investors will have a more pessimistic view of investing in Ukraine than they had before the conflict. Existing operations could be destroyed. Will there be a will to restore such facilities? Alternatively, companies may decide to close and move operations to other less risky countries. Service-based operations are less sticky and can be uprooted much quicker than established manufacturing plants and energy facilities. Large companies are also likely to have other operations in eastern Europe, which could expedite the relocation process. Whatever the outcome, Ukraine will take a long time to recover. Infrastructure will need to be rebuilt. Citizens who fled would need to return. Ukraine’s FDI outlook is depressingly bleak.

More coverage of the Ukraine invasion from Investment Monitor: