China Threatens Retaliation Against Ericsson if Sweden Doesn't Drop Huawei 5G Ban
By Stu Woo
Beijing is giving Sweden one last chance to reverse its ban on
telecommunications-equipment giant Huawei Technologies Co., a
Chinese state media outlet said, before it could retaliate against
rival Ericsson AB.
Ericsson's participation in the next round of China's massive 5G
build-out is linked to whether Stockholm changes its stance on
Huawei, according to the Global Times, a Chinese Communist Party
Swedish regulators banned wireless carriers from using the
Chinese company's 5G equipment in October, citing national-security
concerns. Huawei is challenging the decision in Swedish courts,
with a ruling expected in the coming weeks.
A spokesman for Stockholm-based Ericsson declined to comment. A
spokesman for Sweden's foreign-trade ministry didn't respond to
requests for comment. Ericsson shares were down nearly 4% Tuesday,
trading slightly lower than its peers amid a broadly lower tech
The warning in the Chinese media is the latest example of
Beijing using the heft of its domestic market to protect its
business and foreign-policy interests. China last year restricted
imports of Australian wine, beef and other goods after Australia
enacted its own Huawei ban and called for an investigation of
Beijing's handling of the coronavirus pandemic.
After Swedish regulators banned Huawei last October, Chinese
officials and state-controlled media outlets called the decision
unfair, saying that Huawei presented no security risks and that
Sweden was trying to protect a homegrown champion in Ericsson. They
threatened to retaliate against Swedish companies doing business in
China, including Ericsson and its largest shareholder, Investor AB,
the investment company of Sweden's influential Wallenberg family
that has major holdings in several big European companies.
The prospect of retaliation prompted Ericsson's Chief Executive
Börje Ekholm to mount a lobbying campaign on Huawei's behalf. He
criticized Swedish politicians and solicited lawyers to help Huawei
fight the Swedish ban. He said Ericsson gets only 1% of its sales
from Sweden, versus 8% from China, where the company also employs
13,000 people and runs a factory.
China is the world's largest 5G-equipment market. Its four major
state-owned wireless carriers are conducting another round of 5G
equipment tests to determine which suppliers to use in the next
phase of building nationwide cellular networks, the Global Times
said in its article published Monday.
In March, Chinese media outlets and Communist Party-affiliated
groups encouraged a purge of Swedish retailer Hennes & Mauritz
AB's H&M brand from much of the Chinese internet. The move came
after the fashion brand said it was seeking to ensure that its
cotton didn't come from the Chinese region of Xinjiang, where the
U.S. and U.K. governments and human-rights groups have alleged the
Chinese government is committing genocide and using forced labor.
China has called those accusation lies, saying its actions in
Xinjiang are meant to combat terrorism and improve livelihoods.
H&M has stuck to its stance, which resulted in landlords
closing some of its outlets in China. Other companies such as
Japan's Muji have gone the other way, advertising its use of
The business environment has forced Swedish companies that do
business in China to consider exit strategies, said Jerker
Hellström, director of the Swedish Center for China Studies and
member of the Sweden-China Trade Council.
"I'm not saying that companies are preparing to leave China, but
for the first time they're thinking seriously that the challenges
will be too high," Mr. Hellstrom said. "There will be conditions
for them to stay in China. What's in it for China? They always have
to think about it."
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
May 11, 2021 09:51 ET (13:51 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Historical Stock Chart
From Jun 2021 to Jul 2021
Historical Stock Chart
From Jul 2020 to Jul 2021