Major US Companies Exit Russia—but Don’t Be Fooled

Commentary A number of highly influential tech companies have suspended their operations in Russia. Their collective decision was, of course, inspired by events in Ukraine. The first week of March saw the likes of Netflix, PayPal, Mastercard, and Visa, to name just four American multinationals, all exit the Russian market. Will they return? In truth, only time will tell. Representatives from Netflix told TechCrunch that it refused to comply “with a new Russian law that requires streaming companies to host 20 Russian propaganda channels.” Because of this ridiculous demand, Netflix decided to pause “all future projects it had planned to produce in Russia.” Likewise, Adobe, the American multinational computer software company headquartered in San Jose, California, also announced plans to exit the Russian market. According to a statement released by the company, its decision was motivated due to a fear that Adobe’s products and services would be used to support an “unlawful war.” Companies leaving Russia is good news. The more, the better. However, as you will see, when it comes to actually making money, the Russian market is not as lucrative as many might imagine. Would the same companies be as quick to remove themselves from the Chinese market? After all, China is a country where genocide is taking place, where innocent women and children are slaughtered. But don’t expect major American companies to remove themselves. Why? Because there’s money to be made. Lots of it. On March 5, as Reuters first reported, PayPal announced plans to shut down services in Russia with immediate effect. Ukrainian Vice Prime Minister Mykhailo Fedorov even shared a tweet discussing a letter he received from Dan Schulman, PayPal’s CEO. However, as Politico recently noted, for U.S. tech giants like PayPal, the Russian market “amounts to only a tiny fraction” of their overall annual revenue. For PayPal, like a number of other big tech companies, China is where the real money is made. In 2020, PayPal Holding Inc became the first foreign operator with complete control of a payment platform in China. Last year, PayPal, the biggest fintech company in existence, made a concerted effort to expand its digital footprint in China. According to iResearch, a leading market research firm, the Chinese market is an especially lucrative one. In the space of five years, between 2016 and 2021, the market size of cross-border e-commerce in China doubled, from 3 trillion yuan to 6 trillion yuan (roughly $471 billion to $942 billion). PayPal is eyeing up a sizable slice of this profit-laden pie. A smartphone with the PayPal logo is placed on a laptop in this illustration taken on July 14, 2021. (Dado Ruvic/Illustration/Reuters) Then there’s Mastercard, another payment behemoth. The same day PayPal announced plans to pull out of the Russian market, Mastercard announced that it was suspending its network services in the transcontinental country. Cards issued by Russian banks are no longer supported on the Mastercard network. In China, however, they very much are. In fact, MasterCard Worldwide and Bank of China recently launched MasterCard MoneySend, which, we’re told, “leverages MasterCards global payment network and card products to provide Chinese consumers with a convenient, fast, safe and reliable way for cross-border person-to-person money transfer.” In Russia, as the abovementioned Politico piece highlighted, when it comes to actual money, U.S. tech companies (including fintech companies) “have relatively little on the line.” The likes of “Apple, Google, Meta and Netflix combined,” for example, stand to “lose between 1 percent to 2 percent of their multibillion-dollar revenues” if they remove all of their services from Russia. A number of American game companies have also pulled out of the Russian market. However, yet again, China, the biggest consumer of video games in the world, is where the real money is made. One of the companies to extricate itself from the Russian market is Epic Games, an American video game and software developer and publisher based in Cary, North Carolina. Epic Games has close ties with Tencent, a Chinese company that has close ties with the Chinese regime. Riot Games, another American gaming company that recently halted operations in Russia, is also closely associated with Tencent. Activision Blizzard, a video game company based in Santa Monica, California, recently pulled out of Russia. At the same time, however, it is heavily invested in the Chinese market. Back home, Chinese companies that aid Russia now face sanctions. But what about U.S. companies that aid China, the United States’ biggest threat? As China continues to circle Taiwan, and as CCP-backed hackers continue to attack U.S. government agencies, important questions need to be asked. Perhaps the most important question of all is this: American multinationals are willing to pull out of Russia, but are they willing to do the same in China? For

Major US Companies Exit Russia—but Don’t Be Fooled

Commentary

A number of highly influential tech companies have suspended their operations in Russia. Their collective decision was, of course, inspired by events in Ukraine.

The first week of March saw the likes of Netflix, PayPal, Mastercard, and Visa, to name just four American multinationals, all exit the Russian market. Will they return? In truth, only time will tell.

Representatives from Netflix told TechCrunch that it refused to comply “with a new Russian law that requires streaming companies to host 20 Russian propaganda channels.” Because of this ridiculous demand, Netflix decided to pause “all future projects it had planned to produce in Russia.”

Likewise, Adobe, the American multinational computer software company headquartered in San Jose, California, also announced plans to exit the Russian market. According to a statement released by the company, its decision was motivated due to a fear that Adobe’s products and services would be used to support an “unlawful war.”

Companies leaving Russia is good news. The more, the better.

However, as you will see, when it comes to actually making money, the Russian market is not as lucrative as many might imagine.

Would the same companies be as quick to remove themselves from the Chinese market?

After all, China is a country where genocide is taking place, where innocent women and children are slaughtered. But don’t expect major American companies to remove themselves.

Why?

Because there’s money to be made. Lots of it.

On March 5, as Reuters first reported, PayPal announced plans to shut down services in Russia with immediate effect. Ukrainian Vice Prime Minister Mykhailo Fedorov even shared a tweet discussing a letter he received from Dan Schulman, PayPal’s CEO.

However, as Politico recently noted, for U.S. tech giants like PayPal, the Russian market “amounts to only a tiny fraction” of their overall annual revenue. For PayPal, like a number of other big tech companies, China is where the real money is made. In 2020, PayPal Holding Inc became the first foreign operator with complete control of a payment platform in China. Last year, PayPal, the biggest fintech company in existence, made a concerted effort to expand its digital footprint in China.

According to iResearch, a leading market research firm, the Chinese market is an especially lucrative one. In the space of five years, between 2016 and 2021, the market size of cross-border e-commerce in China doubled, from 3 trillion yuan to 6 trillion yuan (roughly $471 billion to $942 billion). PayPal is eyeing up a sizable slice of this profit-laden pie.

Epoch Times Photo
A smartphone with the PayPal logo is placed on a laptop in this illustration taken on July 14, 2021. (Dado Ruvic/Illustration/Reuters)

Then there’s Mastercard, another payment behemoth. The same day PayPal announced plans to pull out of the Russian market, Mastercard announced that it was suspending its network services in the transcontinental country. Cards issued by Russian banks are no longer supported on the Mastercard network. In China, however, they very much are.

In fact, MasterCard Worldwide and Bank of China recently launched MasterCard MoneySend, which, we’re told, “leverages MasterCards global payment network and card products to provide Chinese consumers with a convenient, fast, safe and reliable way for cross-border person-to-person money transfer.”

In Russia, as the abovementioned Politico piece highlighted, when it comes to actual money, U.S. tech companies (including fintech companies) “have relatively little on the line.” The likes of “Apple, Google, Meta and Netflix combined,” for example, stand to “lose between 1 percent to 2 percent of their multibillion-dollar revenues” if they remove all of their services from Russia. A number of American game companies have also pulled out of the Russian market.

However, yet again, China, the biggest consumer of video games in the world, is where the real money is made. One of the companies to extricate itself from the Russian market is Epic Games, an American video game and software developer and publisher based in Cary, North Carolina. Epic Games has close ties with Tencent, a Chinese company that has close ties with the Chinese regime. Riot Games, another American gaming company that recently halted operations in Russia, is also closely associated with Tencent. Activision Blizzard, a video game company based in Santa Monica, California, recently pulled out of Russia. At the same time, however, it is heavily invested in the Chinese market.

Back home, Chinese companies that aid Russia now face sanctions. But what about U.S. companies that aid China, the United States’ biggest threat? As China continues to circle Taiwan, and as CCP-backed hackers continue to attack U.S. government agencies, important questions need to be asked.

Perhaps the most important question of all is this: American multinationals are willing to pull out of Russia, but are they willing to do the same in China? For these companies, cutting off Russia is the easy part; cutting off China, on the other hand, is a whole different matter entirely.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


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John Mac Ghlionn is a researcher and essayist. His work has been published by the New York Post, Sydney Morning Herald, Newsweek, National Review, and The Spectator US, among others. He covers psychology and social relations, and has a keen interest in social dysfunction and media manipulation.