If The EU Bans Huawei, Will China Counter Nokia And Ericsson?
On Monday (July 20), according to the Wall Street Journal, China is considering retaliation against the two major European telecommunications equipment manufacturers, Nokia and Ericsson, as EU members may follow the United Kingdom and the United States to ban Huawei's 5G network.
According to people familiar with the matter, the Chinese Ministry of Commerce is considering implementing export controls to prevent Nokia and Ericsson from exporting their products made in China to other countries. But this is the worst-case scenario. China will use this approach only when European countries severely crack down on Chinese suppliers and ban them from using 5G networks.
Last week, the United Kingdom required its wireless operators to stop purchasing Huawei 5G equipment by the end of 2020 and remove Huawei 5G equipment from its network by the end of 2027.
The EU has not yet banned Huawei, but in January this year it took a more moderate stance and issued 5G network security recommendations. EU member states can voluntarily adopt these recommendations to restrict the use of Huawei in each country. The EU is expected to issue a report soon detailing how its 27 member states have adopted these measures. Germany, the EU's largest country, is not expected to decide whether to ban Huawei from using its 5G network until September at the earliest.
The Ministry of Commerce of China said on Thursday that China will take necessary measures to protect the legitimate rights and interests of Chinese companies in response to the British government’s recent ban on Huawei. But the Chinese Ministry of Foreign Affairs did not respond to a request for comment on Monday.
The 5G cellular network is expected to be about 100 times faster than the current 4G network, and it is the future cutting-edge technology that will support industries such as manufacturing and transportation. Huawei is the world's largest manufacturer of cellular base station equipment. Its main competitors are Finland's Nokia and Sweden's Ericsson.
Nokia and Ericsson have manufacturing plants and thousands of employees in China. Nokia has a factory and approximately 16,000 employees in the Greater China market, including Hong Kong and Taiwan, most of whom are engaged in research and development. Ericsson has a manufacturing base and R&D facilities in China, and has approximately 14,000 employees in Northeast Asia including China, Japan, South Korea and Taiwan. After Nokia learned of possible restrictions a few weeks ago, it assessed its supply chain and formulated a contingency plan to shift global production. Both Nokia and Ericsson can respond to China's restrictions by moving production to other parts of Asia, Europe or North America.