5 times companies found themselves entangled in a geopolitical mess

The furore in India over a Twitter post shared by a Pakistani partner of Hyundai has underlined how easily multinational companies can get entangled in a geopolitical storm. 

The South Korean car manufacturer maintains operations in both India and Pakistan - the nuclear armed neighbours who have fought three wars and came close to another one in 2019. 

Over the weekend, Nishat Group - Hyundai’s Pakistani affiliate - sent out a post commemorating Kashmir Solidarity Day. That sparked an outcry in India, which is Hyundai’s second biggest market after South Korea. 

Kashmir is a disputed territory claimed by both New Delhi and Islamabad.  

Even though Hyundai’s Pakistani affiliate deleted the post, it’s ramifications can still be seen as Indians continue to call for a boycott of Hyundai cars.  

This isn’t a one-off event. It has become increasingly challenging for multinational companies to manoeuvre around geopolitical tensions in recent years. 

Here are a few other examples: 

Huawei’s Chinese connection 

Huawei is one of the biggest casualties of a tussle between two superpowers. 

The privately-owned Chinese telecom giant faces multiple legal challenges in the United States. 

Huawei is the world’s largest supplier of telecoms equipment and products that form the backbone of wireless networks. 

In recent years, it has been singled out and banned from participating in contracts for 5G networks in a number of countries as Washington suspects Huawei’s equipment can be used by the Chinese government to spy on others. 

Even though it has never been proven that Huawei has been used to spy on anyone, the Zhejiang-based company remains an outcast in major markets. 

Elbit Systems bows out 

Few rifts are as enduring and global in nature as Israel-Palestine — and the companies which come in between end up paying a high price. 

Elbit Systems, Israel’s biggest privately-owned arms manufacturer, was forced to shut its factory in Oldham, a town in Northern UK, last month in the face of persistent protests from activists. 

The company, which is the biggest supplier of drones to Israeli forces, faced backlash as activists said Tel Aviv uses Elbit technology to maintain an illegal occupation over Palestinian territories. 

As companies expand, raising money from one market and selling products in another, the risks they face are also multiplying, experts say. 

“A US company investing in Ghana, for instance, needs to understand not just America’s foreign policy toward Ghana and Ghana’s internal politics but also Chinese policy toward Ghana, given Beijing’s commercial clout there,” wrote John Chipman, the CEO of International Institute for Strategic Studies in an influential 2016 paper. 

No TikToking in India  

After a deadly 2020 border clash between Indian and Chinese soldiers, New Delhi launched a crackdown on dozens of Chinese tech firms including WeChat, UC Browser and video-sharing app TikTok. 

Around 20 Indian soldiers were killed in the Himalayan border skirmish, prompting street protests and calls in India to ban Chinese companies. 

India went ahead with its decision despite concerns that it can create problems for some of its own companies which import parts or capital from China. 

Chinese firms such as mobile phone maker Xiaomi, which have invested billions of dollars in the Indian market, complain that New Delhi is using tax and other measures to scale down their operation. 

Kinross looks the other way 

Since 2014, when Russia annexed Crimea from Ukraine, the US has imposed a series of sanctions on Russian businesses and officials, making it risky for foreign companies to operate there. 

Caught in the crisis was Canadian gold miner Kinross, which owns the Kupol mine in Russia’s Chukotka region. 

For Kinross the mine has the lowest operating costs, making it difficult for the company to sell despite the threat of US sanctions. 

"For us, it's situation normal in Russia. We continue to operate as we always have,” Paul Rollinson, the CEO of Kinross, said in an interview, months after the US sanctions were enforced. 

But standing in face of the US sanctions is not easy for multinational firms especially if they have business interest in American cities.

French oil giant Total reluctantly exited from a project to develop a gas field in Iran after former US President Donald Trump reimposed sanctions on Tehran. 

European leaders who back negotiations to settle Iran’s nuclear issue couldn’t do much to convince their companies to keep doing business in Iran. 

The Muslim backlash

In 2020, French President Emmanuel Macron caused outraged across the Muslim world when he said Islam is a religion “in crisis” and backed magazines which had published blasphemous caricatures of Prophet Muhammad. 

The immediate result of that were calls to boycott French products and companies in Muslim countries. 

Carrefour, which operates a chain of superstores, faced boycott calls in Saudi Arabia, Qatar and Turkiye. 

In Indonesia, shop owners removed French cosmetics and biscuits, raising concerns in Paris that the campaign could hurt the country’s exports.