Apple Inc., Nike Inc. and Walt Disney Co. are among the raft of big consumer brands deciding to halt sales in Russia following the invasion of Ukraine. While that sounds like an appropriate response to Moscow’s brutality, it also smells of opportunism.
More than a dozen major corporations have announced plans to pull back from Russia as the war intensifies. Yet it’s hard not to wonder whether companies were taking a principled stand only once it was no longer feasible to do business in the country. With transportation in and out of Russia constrained, it was going to be a logistical challenge to get physical goods to consumers. Add to that limited access to international payments systems, a crumbling ruble and widespread economic disruption, and you have a recipe for quickly evaporating sales.
In such an environment, any smart executive would do just what these companies did: stop trying, while enjoying the good PR won by pushing back at Putin. But if they really wanted to have an impact, they would have confronted Russia’s belligerence long before the invasion even started.
Nike at least appears to have been transparent about its reasons for pulling back from Russia. The company “cannot guarantee the delivery of goods to customers” to the country, the company said Tuesday.
And both Nike and Apple deserve credit for their rectitude in the past when the effect on the bottom line was less clear. The two companies, for example, were among the first and the few in their industries to join the Washington-based Fair Labor Association, which monitors working conditions around the world. And they have made considerable efforts to build environmentally sustainable supply chains.
But true moral courage comes from taking a stand when there is a real risk of losing something, such as revenue or market access. Instead, we have seen US companies including Apple and Disney fail to truly reckon with humanitarian issues, such as the alleged use of forced labor in China’s Xinjiang area. (China has denied accusations of human rights abuses.) At least seven suppliers to the iPhone maker, for example, have been linked to forced labor in the Western province. A live-action version of Disney film “Mulan” was filmed in the same area where Uyghurs live under repression.
Apple has said it has zero tolerance for forced labor, while Disney has explained that it is required to work with the the Chinese government and local production companies in order to film there.
Disney also has modified entertainment content to mollify Chinese or Russian authorities. As Lexa Brenner, editor-in-chief of the Harvard International Review, wrote last year: “Behind closed doors, Disney, and indeed all of Hollywood, have been self-censoring plots, characters, and dialogues for decades to appease the Chinese Communist Party.”
In Russia, Disney’s Pixar unit altered a brief, innocuous line in the animated film “Onward” to remove reference to a female character’s girlfriend, in line with President Vladimir Putin’s anti-LGBTQ agenda. Disney didn’t respond to media inquiries at the time.
For companies like Apple and Disney, leaving Russia poses little risk. The country accounts for around 1% of Apple’s annual sales and is a relatively small market for Hollywood films. China is a different matter. In addition to being a major source of revenue, it hosts Disney theme parks and is the production base for most iPhones, iPads and Macs.
Standing up to Beijing means putting all that at risk, and to many executives, money is more valuable than human rights. For years activists and politicians have urged US companies to reduce their reliance on China, and shift more of their supply chain away from the country. Leaders seem reticent to engage in such decoupling, with their exposure still high. If they truly hope to be in a position to take the moral high ground, they need to plan ahead, not act on a whim.
So if we want to measure business executives’ true character, watch what they do in authoritarian countries during times of peace and abundant revenue. We need not wait for the violence to start and the money flow to stop.
Bloomberg
