Swedish telecom equipment giant Ericsson has ruled out pulling out of the Chinese market, even as local rivals such as Huawei pose increasing challenges in the country’s 5G equipment industry.
Ericsson said it would “continue to focus on our customers in mainland China” after local media reported that it was withdrawing from the country, where it is losing ground to larger domestic companies.
Huawei’s domestic competitor ZTE came in second place, winning about 26% of the contracts. Third-place Ericsson shared the remaining 22% of its contract with China’s Datang and Finland’s Nokia.
Ericsson also faces growing geopolitical uncertainty in China after Stockholm banned network operators from using Huawei equipment to build Sweden’s 5G network. ing.
In its latest financial report, the company pointed out that uncertainty in Sino-Swedish relations is a major risk factor in its operations. Ericsson said that “further changes in economic or political policies within or relating to China” “could have a material adverse effect on our business.”
In response, the Chinese government said it would “take all necessary measures” to protect Chinese companies overseas, raising concerns that Ericsson could face retaliation in China.
Ericsson’s net sales last year fell 10% year-on-year to SEK 263.4 billion (US$25.73 billion), with sales in North America falling 41% due to lower capital spending and inventory levels, according to financial reports. That’s what it means. It was published last week.
The company’s global workforce fell by more than 5% in the same year, from 105,529 to 99,952, largely due to “cost-cutting activities,” the report said. The number of employees in China decreased by nearly 8% from 10,791 to 9,950.
Nokia to withdraw from joint venture with Huawei amid US-China tensions
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In response to the Post’s investigation, Ericsson did not provide details about the layoffs.
“Ericsson continues to make normal business adjustments,” the company said in a statement.
Berger Ekholm, Ericsson’s president and CEO, said the company had “survived a difficult mobile network market” in 2023. The company is expected to stick to its cost reduction strategy in 2024.
“We have already started reducing costs in 2022, and at the end of 2023 we achieved a total cost reduction of SEK 12 billion, in line with our targets. We plan to continue reducing costs during 2024.” Ekholm said.
