In a climate of intensifying Russian-Ukrainian conflict, and under threat of possible confiscation of its infrastructures by the central government, the world’s leading beauty brand has chosen to maintain “restricted activity” in Russia. This is what its General Manager Nicolas Hieronimus told France Inter on Saturday November 25.
Faced with the economic and financial sanctions imposed by Brussels on the Russians in early 2022, in a show of solidarity with the Ukrainian people under attack, Moscow retaliated the hard way. In April 2023, the Russian capital decreed the possibility of recovering ownership and nationalizing assets abandoned by subsidiaries of foreign companies operating in the country. No matter how long they had been on the market. At the time, Moscow spoke of a genuine “response to the aggressive actions of unfriendly countries.”
It is this retaliatory measure that the L’Oréal group is determined to avoid at all costs, by maintaining limited activity at its local factory. However, the decision is not as strategic as it seems. Indeed, before the Russian-Ukrainian conflict, the French group generated just 2% of its sales in Russia. On the other hand, L’Oréal is hoping to protect its real estate assets, as well as jobs on its production lines.
Avoiding seizures and actions against employees
Interviewed on France Inter’s “On n’arrête pas l’éco” program on Saturday November 25, Nicolas Hieronimus, CEO of l’Oréal, said he wanted to maintain “a limited part of [the] business in Russia”.
This strategy follows on from his announcement on March 8, 2022. At that time, the cosmetics giant announced the temporary closure of its 40 or so directly-operated sales outlets (boutiques and department stores), as well as its e-commerce site. At the same time, L’Oréal announced that it would be halting its industrial and advertising investments, but would be maintaining its Kaluga plant.
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Featured Photo: © L’Oréal