Ericsson is caught in cross-hairs between China, Sweden

crosshairs
A Chinese government official indicated China might retaliate against Swedish businesses. (Getty Images)

A day after Sweden’s telecom regulatory authority banned Huawei and ZTE equipment in Sweden’s 5G networks on soon-to-be-auctioned spectrum, China’s foreign ministry spokesman Zhao Lijian said Sweden should reverse the ban to avoid a "negative impact" on its own companies, according to Reuters.

The loser in all this, besides Huawei and ZTE, may be Ericsson.

Ericsson is a major employer in Sweden and one of the three primary telecom vendors in the world along with Nokia and Huawei.

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The Chinese minister’s wording seemed a threat to Ericsson’s business dealings in China. Zhao said, “Sweden should uphold an objective and fair attitude, and correct its wrong decision, to avoid bringing a negative impact to China-Sweden economic and trade cooperation and the operations of Swedish enterprises in China.”

In the midst of all the hullaballoo between Sweden and China, Ericsson reported its third quarter earnings today. Ericsson President and CEO Börje Ekholm said, “Our growth in China is particularly strong," and “strengthening our position in China is critical for our long-term competitiveness,” according to a Seeking Alpha transcript.

RELATED: Ericsson’s 3Q earnings buoyed by 5G in China

An analyst on the earnings call asked Ekholm if he sees any risk to Ericsson if the Chinese government decides to retaliate against European vendors.

Ekholm said he leaves it up to governments to work out such things. “We focus instead on doing what we can and what we can impact,” he said. “And what we really can impact is actually the competitiveness of our portfolio, providing our customers with the right features and right products.”

He said Huawei is “one of our fiercest competitors around the world” but at the same time the two companies “cooperate when we drive the 3GPP standard.”

Ekholm also indicated the opportunities in China would continue – although he didn’t offer any forecast about Chinese retaliation.

“They will continue to build out on the spectrum bands that we have awarded contracts now,” he said. “But of course, over time, they will award other spectrum bands as well with contracts. And we'll have to compete there to seek to win there as well, and we will do so.”

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