It isn't usually an American company doing the local operations, but a local subsidiary. Like Walmart Canada telling Walmart corporate to pound sand in the 1990's over Cuban pajamas. It's illegal for Canadian companies to participate in the US embargo of Cuba.

This is all well within the realm of what governments can and do regulate. Want to do business in a country with their laws or not is the choice.

The employees of the actual subsidiary entity follow the laws of the country they're based in.