​ Ericsson reaffirms commitment to the Chinese market

Editing by Greg Gao/WM Zhang

Ericsson, the Swedish telecom giant, reiterated its commitment to the Chinese market despite continued uncertainties from geopolitical tensions between China and the West at its late April media briefing in Beijing.

Sinisa Krajnovic, Ericsson's Vice President and Head of Digital Services in Market Area North-East Asia, said, “Our Chinese R&D team has already been involved in core product development for China. We will continue to invest more in the country and support China's 5G development.”

Ericsson is said to be consolidating its market leadership after China's Huawei was sanctioned by the U.S. and Nokia underwent executive changes. The 2020 statistics from industry analysis agency Dell'Oro Group show that Ericsson ranked first in the global telecommunications equipment market share, excluding the Chinese market. Its 2020 revenue increased by 163% year-on-year, with gross profit margin and cash flow close to historic highs, driven by the global 5G business.

Though Ericsson's total revenue from China is said to account for only about 10% of its total, the company considers China at the "forefront of the industry" in the words of its CEO Brje Ekholm. "China's 5G technology has been developed continuously and is getting mature. If cooperation with the Chinese market is interrupted, it will be very difficult to catch up with it," he said.

Sinisa Krajnovic said that before 5G, China was mostly a follower of new international standards and adopted new technologies and applications after their trials overseas first. But in the 5G era, China took the lead for the first time in R&D and applications. "Its investment is very early and huge. In the long run, I believe that China will benefit a lot from it," he added.

China has preliminarily built the world's largest 5G network, with 260 million 5G mobile terminal connections now. It also has the largest number of 5G subscribers and technological strengths in AR, VR, and cloud-based games, and a vast consumer base.

Ericsson has continuously increased its investment in China in recent years. Its annual China R&D investment is at RMB3 billion ($464.4 million) and cumulatively more than RMB15 billion($2.32 billion) in the past five years, mainly related to 5G.

At present, Ericsson has more than 10,000 employees in China. More than 5,500 of them are engaging in 5G products and solution R&D in Beijing, Shanghai, Chengdu, and Nanjing.

According to Wu Riping, Ericsson's Head of Network Portfolio in Market Area North-East Asia, the company's Chinese R&D team is involved in Ericsson's core product development. It includes the third-generation AAU products (Ericsson's first AAU support 200MHz, 320W) and fourth-generation large-scale array antenna products.

Wu told JW Insights that "Because China itself is the 5G core market, our Chinese R&D team made great efforts in product localization and innovation."

So far, Ericsson is also the only non-Chinese communication equipment supplier that has cooperated with China's three major telecommunications operators - China Telecom, China Unicom, and China Mobile - and obtained 5G network-related contracts.

Despite U.S. sanctions on Huawei, Ericsson considers it both a competitor and partner. Sinisa Krajnovic said: "We cooperate with Huawei a lot in establishing global standards, but we compete with it in the market. The competition will make us more outstanding. We welcome this kind of competition. Because only with advanced technology, innovative ability, and price advantage can we win in the market," he said. This kind of competition and cooperation promotes the rapid development of mobile communication technology.

During the press conference, Ericsson released 64T Massive MIMO, a lightweight Massive MIMO product based on the Ericsson Silicon platform, Street Macro series, a new generation of street station products, a new 5G Core Policy Studio network programmable tool, among others.