Swedish telecoms equipment giant Ericsson denied that it is withdrawing from the China market, even as local rivals including Huawei Technologies pose growing challenges in the country’s 5G equipment industry.
Ericsson said it “remains committed to its customers in mainland China”, after local media reported that the company is exiting the country, where it has been losing ground to domestic giants.
Huawei’s domestic competitor ZTE came in second, winning about 26 per cent of the contracts. Ericsson, in third place, shared the remaining 22 per cent of contracts with China’s Datang and Finland’s Nokia.
Ericsson also faces rising geopolitical uncertainties in China, after Stockholm banned network operators from using Huawei equipment to build Sweden’s 5G network.
The company noted in its most recent financial report that uncertainties in the Sino-Swedish relationship is a major risk factor in its operations. “Further changes in economic and political policies in or relating to China” may “have a material adverse effect on the company’s business”, Ericsson wrote.
In response, Beijing has said it would “take all necessary measures” to defend Chinese companies overseas, stoking concerns that Ericsson could face retaliation in China.
Last year, Ericsson’s net sales fell 10 per cent from a year earlier to 263.4 billion kronas (US$25.73 billion), with sales in North America dwindling by 41 per cent as a result of reduced capital expenditure and inventory levels, according to its financial report published last week.
The company’s global headcount dropped more than 5 per cent to 99,952 from 105,529 during the year, mostly due to “cost-reduction activities”, the report said. Headcount in China fell nearly 8 per cent to 9,950 from 10,791.
Nokia set to exit joint venture with Huawei amid US-China tensions
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In response to a Post inquiry, Ericsson declined to provide details on the lay-offs.
“Ericsson continually makes normal business adjustments,” it said in a statement.
Börje Ekholm, president and CEO of Ericsson, said the company “navigated a difficult mobile networks market” in 2023. The company is expected to adhere to its cost-saving strategy in 2024.
“We started reducing costs already in 2022 and at the end of 2023 we achieved a gross run-rate of 12 billion kronas in cost savings, in line with our target. We expect to continue to take out costs during 2024,” said Ekholm.
Source: scmp.com
