Russia's Discounted Empire

Russia’s war on Ukraine triggered a broad exodus of Western businesses. By 2026, more than 500 international companies had sold or shut down their Russian operations, writing off $170 billion in assets. For many, the only way to recover any money was to sell to local buyers.

That handed Russian entrepreneurs — some with no experience running companies of comparable size or complexity — major businesses built to Western standards at steep discounts. The Bell examined what happened next. Its analysis found that over four years of war, former Western-owned assets barely grew.

According to the Kyiv School of Economics, 565 international companies sold or liquidated Russian assets during the past four and a half years of war. By 2025, foreign businesses leaving Russia had lost $170 billion through write-offs, nationalizations, unfair court rulings, and mandatory payments to the Russian budget.

Exit terms were far from market-based. Many companies sold assets at discounts of 90% to 100% from fair market value, paid an additional exit levy, and still could not freely choose buyers.

Beneficiaries ranged from billionaire Vladimir Potanin to Chechnya’s leader Ramzan Kadyrov to little-known businessmen. Volkswagen and Hyundai/Kia plants went to car dealer Alexander Varshavsky, a supplier to Russian security agencies. Continental and Bridgestone tire plants went to lottery owner Armen Sargsyan. Neither had experience managing businesses of that scale, but both had ties to senior Russian officials.

The Bell analyzed financial statements from 92 companies sold to Russian buyers in 2022-24. It compared their 2021 results, when all were foreign-owned, with 2025, after most had spent two or three years under new management.

Combined 2025 revenue was essentially unchanged from 2021 at R2.3 trillion ($26.7 billion). Net profit fell 20%. Of the 92 companies, 70 were profitable and 22 posted losses.

Several factors may explain the stagnation. Former foreign subsidiaries were deeply integrated into global supply chains and were hit especially hard when sanctions severed those links. Russia’s wartime shift toward defense also matters: Defense industries grew more than 20% over four years, while the economy overall grew 18.3%, implying weaker performance in civilian industry, where foreign-owned businesses had been concentrated.

Only two sectors maintained strong growth: retail, including food service, and consumer-goods manufacturing. Retail revenue nearly doubled, while consumer-goods production rose 35%.

But 80% of the retail increase came from one company, Vkusno — i tochka (Tasty — and That’s It), the former McDonald’s business. Its revenue rose to R143 billion ($1.6 billion), largely because a new operating company consolidated four former McDonald’s entities. It also no longer pays royalties for the McDonald’s brand.

Every other sector stagnated or shrank. Auto manufacturing performed worst, with revenue among sampled companies falling fourteenfold. Plants formerly operated by Volkswagen, Hyundai, Kia, Toyota, and Mercedes lost access to imported components and largely stopped production. Efforts to retool them for Chinese brands have had limited success, while Chinese automakers have captured the Russian market through imports.

The biggest loss-maker was Gruppa Ilim, Russia’s largest pulp-and-paper producer, once 50% owned by International Paper. It lost R16.5 billion ($191 million) in 2025 amid sanctions, lost European market access, and experienced logistics problems in exports to China.

Other former Western assets face deeper trouble. Meteor, formed from former Otis elevator businesses bought by S8 Capital, faced a bankruptcy petition against Meteor Lift Shcherbinka (Meteor Elevator Shcherbinka). Another unit, Meteor Lift Moskva (Meteor Elevator Moscow), said it planned job cuts to save R150 million ($1.7 million) annually.

Desport, the former Decathlon chain, has also faced bankruptcy risk. OBI remains unprofitable. And Luzales-Tikhvin, a former IKEA plant, entered a temporary shutdown in March 2026 after losses of nearly R400 million ($4.6 million).