China may retaliate against Huawei’s competitors

Ericsson

China is considering retaliating against manufacturers Nokia and Ericsson if the EU follows the US and UK in banning Huawei from their 5G networks, the WSJ has reported.

KEY POINTS:

  • China may seek to retaliate against European telecoms equipment makers such as Ericsson and Nokia if the European Union bans Huawei from their 5G networks
  • The Chinese government could look into export controls over products produced in the country
  • Government rhetoric and geopolitics around the world are shifting away from using Huawei Technologies and other Chinese companies for infrastructure projects

Last week the government of the UK ordered telecom operators not to purchase 5G components from Huawei Technologies after the end of this year and remove all existing gear made by the Chinese telecoms behemoth from the 5G network by the year 2027.

Ericsson and Nokia are among the most immediate beneficiaries of a sustained American-led campaign against Huawei.

The Ministry of Commerce in communist China is looking into export controls that would prevent Finland’s Nokia and Sweden’s Ericsson from sending products it makes in the country to other countries, the Journal reported.

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The retaliation would be viewed a worst-case scenario that the Chinese Communist Party would use only if European countries came down hard on Chinese suppliers and banned them from their fifth generation networks. The issue for China would be that if they sanctioned the companies, this would have a knock-on effect to other companies, who would likely seek to shift manufacturing plants out of the country.

The European Union has not gone as far as to recommended a ban on Huawei yet, but has issued a so-called “toolbox” of security standards that member states should apply while using suppliers considered to be high risk to build 5G networks. This has led to some industry commentators speculating that the European Union will eventually hedge its bets, or yield to the US government policy.

Nokia and Ericsson did not immediately respond to requests for comment.

Initial reporting via our content partners at Thomson Reuters. Reporting by Supantha Mukherjee; Editing by Mark Heinrich. Commentary by Rob Phillips.

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