By Stu Woo
Few companies have gained more from the U.S.-led campaign
against China's Huawei Technologies Co. than Ericsson AB. The
Swedish business, in a tailspin a few years ago, now surpasses
Huawei in selling cellular equipment in much of the world.
Yet over the past few months, Ericsson Chief Executive Börje
Ekholm has gone on a lobbying campaign -- on Huawei's behalf.
Mr. Ekholm met Swedish politicians to protest the way the
country barred Huawei equipment from the country's 5G networks over
national-security concerns. He complained to journalists in Europe
and China. He sought law firms to help Huawei fight the ban.
Mr. Ekholm says that in an increasingly intertwined world he is
just looking after his company's interests. After the Swedish 5G
ban, Beijing threatened to retaliate against Ericsson's business in
China, where it runs a major factory and gets 8% of its sales,
versus 1% from Sweden.
"We depend on free trade," Mr. Ekholm said in an interview.
"It's about having access to markets, and that is at the center of
what we are."
The Swedish ban may have boomeranged in other ways as well.
Several Chinese state-controlled media outlets suggested there
could be consequences for the Wallenbergs, a family known as the
Rockefellers of Sweden. Their investment company is a major
shareholder in Ericsson and several other European giants, and the
largest single owner of stocks traded on Sweden's exchange.
Europe has emerged as a battleground in the new technological
Cold War between the U.S. and China. European capitals increasingly
side with Washington. Some of the continent's biggest companies are
defending Beijing. The new Biden administration is signaling its
own China hawkishness, providing executives little hope of a sudden
European business leaders hold up Australia as Exhibit A on the
drawbacks of bad relations with Beijing. After the Australian
government banned Huawei 5G equipment and then called for an
investigation of Beijing's handling of the pandemic last year, the
Chinese government restricted imports of Australian wine, beef and
Last week, Chinese mapping and e-commerce apps removed all
mention of Swedish fashion giant H&M Hennes and Mauritz AB,
essentially erasing it from some of China's most popular online
services. That coincided with a social-media frenzy over the
company's decision to stop sourcing cotton from a region in China
accused of using forced labor.
In the U.K., a ban against Huawei gear triggered protests from
executives. Vodafone Group PLC said removing Huawei gear already in
its networks would cost billions. Sherard Cowper-Coles, chairman of
the China-Britain Business Council, which represents about 500
British organizations that have commercial relations with China,
including BP PLC, Jaguar Land Rover and several universities, said
his group is pressing the British government to maintain commercial
"If we're going to export to countries other than the
Netherlands and Sweden and Denmark, and possibly New Zealand and
Australia and Canada, we are going to be operating in countries
where the human rights- or other situation is less than ideal," Mr.
Cowper-Coles said in a conference call.
U.S. companies, too, have come to China's defense at times when
Washington's China policy threatens business. Qualcomm Inc. and
Microsoft Corp. have both criticized the Trump administration's
restrictions on partnering with Chinese companies.
Few European businesses are more ensnared in the U.S.-China
standoff than Ericsson. U.S. leaders are trying to bolster both it
and Finnish counterpart Nokia Corp. They are offering loans to
developing countries to buy their equipment, while a former
official in the Trump administration even floated the idea of the
U.S. government buying stakes in them. Lacking its own industry
player, Washington prefers the world's phone and internet data to
run through equipment made by these Nordic companies rather than
Ericsson is now walking a tightrope -- trying to position itself
to benefit from the Western backlash against Huawei while also
protecting its sales and manufacturing in China.
The company has deep roots there. Started as a Stockholm
telegraph-repair shop in 1876, it was selling wooden phones in
China in the 1890s.
When Ericsson hit financial turbulence in the 1930s, the company
became the target of the Wallenbergs, a Swedish banking and
industrial family known for scooping up assets in hard times. The
family name became associated with heroism when one member, Swedish
diplomat Raoul Wallenberg, safeguarded 20,000 Jews in Hungary
during World War II.
By 2000, Ericsson was the world's leading supplier of 3G
equipment and a cellphone leader.
Its next two decades were rockier. Alongside Western rivals
Motorola and Nortel, Ericsson started losing telecom-equipment
sales to Huawei and China's ZTE Corp. Both Chinese companies were
selling competitive products at lower prices, sparking a
consolidation that reduced the industry to four big players by
2016: Huawei, ZTE, Nokia and Ericsson.
In 2016, Ericsson asked one of its board members, Mr. Ekholm, an
electrical engineer by training, to overhaul the company. He said
After a decade running Investor AB, the Wallenbergs' investment
vehicle and Ericsson's biggest shareholder, Mr. Ekholm felt settled
in early retirement with his family near Vail, Colo. The
Swedish-born naturalized American was skiing, fishing and serving
on the board of Alibaba Group Holding Ltd., which he joined at the
request of Joe Tsai, a former Investor executive who co-founded the
Chinese e-commerce giant with Jack Ma.
Mr. Ekholm, now 58 years old, said he relented when Ericsson
said he could stay in the U.S. He wakes at 4 a.m. to accommodate
the time zone difference and shuttles among homes in Colorado,
Connecticut and Sweden. A passionate NFL fan, he attended four
straight Super Bowls starting in 2017. He missed the end of that
year's game, when Tom Brady and the Patriots overcame a 28-3 lead
by the Falcons, to catch a flight to China.
Months into his new job, Mr. Ekholm concluded Ericsson had
spread itself too thin and should focus on its core business of
making cellular equipment. He sold businesses and cut employees,
but added thousands of R&D jobs to help Ericsson better compete
in sectors where he felt Huawei was ahead.
Geopolitics started playing an outsize role in corporate
strategy around 2018, Mr. Ekholm says. The Trump administration
accused Huawei of being a national security threat, capable of
allowing Beijing to use its networks and employees to spy around
the world. Huawei says it is a private company and isn't beholden
Washington began serious efforts to persuade allied countries to
ban Huawei and to cripple the Chinese company's supply chain. U.S.
officials viewed 5G as a transformational technology that could
enable commercial and military innovations such as driverless
vehicles, robot-run factories and internet-connected everyday
objects, such as heart monitors and sneakers. They worried about
the prospect of Chinese-backed hackers spying on or sabotaging
The White House began mulling banning 5G equipment manufactured
in China from being used in the U.S., even if the equipment came
from a Western company.
Ericsson has 13,000 employees and a major manufacturing plant in
China, which makes cellular equipment for China and markets in Asia
and Africa. Mr. Ekholm said he responded by making Ericsson's
supply chain more flexible. The company opened its first U.S.-based
5G-equipment factory, outside Dallas, last year.
Meanwhile, U.S. pressure on Huawei was starting to boost
Ericsson's business. Ericsson in January reported one of its best
financial years in the past decade, saying it increased share in
all its markets, including those without any restrictions against
Huawei was still the world's top cellular-equipment maker by
market share in 2020, according to research-firm Dell'Oro Group.
The firm said Ericsson was No. 1 when the Chinese market was
excluded, with about a 35% share of revenue, and is gaining ground
In Sweden early last year, citizens were hardening their views
on China, after bookseller Gui Minhai, who was born in China and
held Swedish citizenship, was sentenced to 10 years in prison on
espionage charges. Mr. Gui's daughter has described him as a victim
of political persecution.
Mr. Ekholm had expected Sweden to adopt European Union
cybersecurity recommendations that would effectively ban Huawei
equipment from Swedish 5G networks, but without naming Huawei or
China. Countries including France, Poland and the Czech Republic
had already adopted similar tactics, which would make it harder for
China to retaliate.
In October, Sweden's telecom regulator went a step further and
singled out Huawei and ZTE. "The millisecond I got the press
release, I realized this was not good," Mr. Ekholm says.
The next day, a spokesman for China's foreign ministry said
Sweden should "correct its mistake and avoid negative impact on
China-Sweden economic cooperation and the Swedish businesses
operating in China." China's ambassador to Sweden said Ericsson
could face consequences, while at least three Chinese
state-controlled media outlets suggested, without evidence, that
the Wallenbergs pushed the Swedish government to ban Huawei.
Their articles pointed out that the Wallenbergs had major shares
in several businesses that do big business in China, including
Swiss industrial giant ABB, Swedish home-appliance maker Electrolux
AB and British-Swedish pharmaceuticals maker AstraZeneca PLC. Some
writers suggested that some of the Wallenbergs' major holdings
should face consequences if Sweden didn't reverse the Huawei
Jacob Wallenberg, the chairman of Investor AB, told a Swedish
newspaper that "stopping Huawei is definitely not good." An
Investor spokeswoman declined to comment on the Chinese media's
reports. She said China is the second- or third-largest market for
many of Investor's holdings, and that the company supported Mr.
Ekholm's leadership at Ericsson.
Mr. Ekholm said he responded to the Sweden Huawei ban and
Beijing's threats on behalf of only Ericsson, not the Wallenbergs.
In interviews with journalists in both Europe and China, he called
the Swedish ban of Huawei and ZTE unfair. Visiting Sweden at the
time, Mr. Ekholm also scheduled a meeting with lawmakers to
criticize what he considered a ham-fisted handling of the Huawei
From late October to early December, Mr. Ekholm sent Sweden's
foreign-trade minister, Anna Hallberg, a series of messages. He
texted her a link to a news article with the headline: "China's
ambassador: We might punish Ericsson." He noted how Sweden handled
the situation differently than other countries: "The decision the
government has supported singles out our Chinese competitors in a
way no other EU country has done," he wrote.
At another point he asked: "Shouldn't you talk to PTS?"
referring to the independent telecom regulator by its initials.
"I really am trying to do what I can, Börje," Ms. Halberg wrote
back. In a written statement, she said she took no measures to
influence the regulator's decision and that Sweden is working to
strengthen economic ties with China.
Huawei asked Mr. Ekholm to help find legal counsel in Sweden,
according to a person familiar with the matter, but Mr. Ekholm said
in a text to Ms. Hallberg that he couldn't find a lawyer to take up
the cause. "There are plenty of cowards unfortunately," he
The text messages became public after a records request by
Swedish newspaper Dagens Nyheter. "The SMSes were merely a way to
document what had happened," Mr. Ekholm now says. "I didn't want
[Swedish politicians] to come back to me and tell me, 'You never
said anything.' "
Some Ericsson employees, meanwhile, felt their CEO crossed a
line by actively helping a rival, according to a person familiar
with the matter, especially considering China's own restrictions on
foreign businesses. All but about 10% of the Chinese
telecom-equipment market is controlled by Chinese players, largely
Mr. Ekholm said he expects and respects different opinions from
a company with 100,000 employees.
Mr. Ekholm says that while Chinese sales are important to
Ericsson, he was primarily concerned about the less-visible effects
of being shut out of the country, where 5G rollout has outpaced the
U.S. and Europe. By being on the ground, learning how 5G works in
the field, "we get to be at the forefront," Mr. Ekholm says.
He says he has been surprised that politics has become part of
his daily life. "I didn't think about this at all when I took this
job," he says. "We find ourselves in an epicenter of activity,
geopolitically, which I think was certainly not the main reason I
signed up and have no real background in."
--William Boston contributed to this article.
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
March 31, 2021 11:41 ET (15:41 GMT)
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