Swedish vendor Ericsson will shut down one of its five research centres in China and plans to transfer 630 employees to a partner, according to a report by the South China Morning Post citing two people familiar with the matter. The newspaper said it received an email statement from Ericsson on 09 September, confirming that it will divest its product R&D activities in Nanjing to TietoEVRY with effect from 01 November this year and offer all the affected workers employment at the Finnish software firm.
The South China Morning Post said Ericsson has "rapidly" been losing share to domestic players such as Huawei Technologies Co in China's 5G market. One source, who declined to be named as he is not authorised to speak to media, said that TietoEVRY has agreed to match the pay of Ericsson employees affected by the arrangement, and those who decline the offer will receive a severance package. A second source said that the Ericsson 5G factory in the same city will not be affected.
The Post said closing the Nanjing centre will leave Ericsson with four remaining major research centres in China, located in Beijing, Shanghai, Guangzhou and Chengdu. The five centres had employed more than 5,000 people, with annual R&D spending topping CNY 3 billion, according to company information.
Ericsson said in July that its Q2 revenue in China dropped by nearly 60 percent from a year ago. Reuters reported that month that Ericsson said it was no longer banking on 5G tenders in China that it previously expected to win. It had previously warned that its business in China could be jeopardised by geopolitical tensions as Swedish authorities forbade Huawei from supplying equipment to Sweden’s 5G network. The company has been campaigning for months against the ban.
Ericsson and Finnish giant Nokia have been awarded only small slivers of the building contracts for 700 megahertz 5G base stations commissioned by China Mobile and the recently established China Broadcasting Network (CBN).
