30 Jan

What’s behind Ericsson’s Huge Interest in China?

WRITTEN BY Ruchi Gupta

Ericsson sees China as a leader in 5G buildout

China is a top priority market for Ericsson (ERIC). But why China and why now? Speaking at a recent investor briefing, Ericsson CEO Börje Ekholm said that China will be the first market in the world to deploy on 5G network on scale. On this basis, the executive revealed that Ericsson is investing heavily to take advantage of China’s anticipated huge mobile network evolution.

What’s behind Ericsson’s Huge Interest in China?

Race for 5G contracts in China

China is shaping up to be a highly competitive market for telecom equipment vendors. Besides Ericsson, Nokia (NOK) is another foreign company in the race for 5G contracts in China. In the past year, Nokia secured several contracts from Chinese operators including a $2.3 billion deal with China Mobile (CHL), China Telecom (CHA), and China Unicom (CHU), announced in November. Domestic companies Huawei and ZTE are also pursuing the commercial opportunity in China’s 5G network development. Huawei is already giving Huawei tough competition on the global stage.

Ericsson trailing Huawei

Huawei increased its share of the global telecom equipment market to 28% in 2017 from 25% in 2016, while Ericsson’s share declined to 27% from 28% over the same period, according to IHS Markit findings cited by Reuters. Nokia, ZTE, and Samsung (SSNLF) captured 23%, 13%, and 3.0% of the global market, respectively, in 2017.

Ericsson struggled to make gains in China during the past mobile network evolutions, but it hopes the transition to 5G will bring it success in the country.

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