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

China is where they make their money
March 14, 2022 Updated: March 20, 2022

Commentary

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

The first week of March saw the likes of Netflix, PayPal, Mastercard, and Visa—to name just four U.S. 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 has decided to pause “all future projects it had planned to produce in Russia.”

Likewise, Adobe, the multinational computer software company, also announced plans to exit the Russian market. According to a statement, the San Jose, California-based firm said its decision was motivated because of 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’ll see, when it comes to actually making money, the Russian market isn’t 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 and innocent women and children are slaughtered. But don’t expect major U.S. companies to remove themselves.

Why?

Because there’s money to be made—a lot 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 Twitter post discussing a letter he had received from PayPal CEO Dan Schulman.

However, as Politico recently noted, for U.S. tech giants such as PayPal, the Russian market “amounts to only a tiny fraction” of their overall annual revenue, and as with a number of other big tech companies, China is where the real money is made. In 2020, PayPal Holdings became the first foreign operator with complete control of a payment platform in China, and in 2021, the world’s largest fintech company made a concerted effort to expand its digital footprint in China.

According to market research firm iResearch, the Chinese market is especially lucrative. In the span of five years, between 2016 and 2021, the market size of cross-border e-commerce in China doubled to 6 trillion yuan from 3 trillion (roughly $942 billion from $471 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. On the same day that PayPal announced plans to pull out of the Russian market, Mastercard announced that it was suspending its network services in the transcontinental country as well. 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 started MasterCard MoneySend, which “leverages MasterCard’s 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,” we’re told.

In Russia, as the aforementioned Politico piece highlights, 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” 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 U.S. gaming companies also have pulled out of the Russian market.

Yet again, however, China, the largest 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, a Cary, North Carolina-based video game and software developer and publisher. Epic Games has close ties with Tencent, a Chinese company that has close ties with the Chinese regime. Riot Games, another U.S. gaming company that recently halted its Russian operations, also is 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’s invested heavily in the Chinese market.

Back home, Chinese companies that aid Russia now face sanctions. But what about U.S. companies that aid China, the biggest threat to the United States? 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: U.S. 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 an entirely different matter.

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

John Mac Ghlionn is a researcher and essayist. His work has been published by the New York Post, The 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.