How do you stop Beijing from being bullied? Take the Prada bags with you

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Beijing promised to punish Swedish telecom giant Ericsson if the Swedes refuse to give in and equip the country’s 5G networks with Huawei technology. Sweden didn’t budge, and now China has restricted Ericsson’s access to the world’s largest telecommunications market. No western company will be safe from such punishment unless western governments and top corporations join forces to thwart China’s blackmail strategy.

Practically at the moment when the Swedish Post and Telecommunications Authority decided in 2020 not to add Huawei and the smaller Chinese company ZTE to their 5G network, Chinese officials threatened retaliation. Sweden must lift its ban, otherwise Ericsson would suffer consequences in China, Beijing’s ambassador announced, and the threats continued.

The decision by the Chinese government will make Ericsson painful. The company’s latest quarterly report in July painted a strange picture: 8% growth worldwide – but falling sales in China. The Chinese market has accounted for around 10% of Ericsson’s sales in recent years. Around the same time, China Mobile, the country’s largest cellular network operator, announced its latest 5G deals. Huawei won 60%, ZTE 30%. According to press reports, Ericsson only gained 2% compared to 11% in the previous round of contracts last year.

Compare this to what happened to Finland’s Nokia. The Finnish parliament passed a law in 2020 that allows some companies to be banned from 5G networks for national security reasons, but the Finnish legislature has not highlighted Huawei or ZTE, contrary to Sweden’s regulation. The Global Times, an outlet operated by the Chinese Communist Party, predicted good things for Nokia, which the newspaper said would have “more room to negotiate” about entering China’s 5G market. Nokia, whose technology was considered to be a little less desirable, went empty-handed from the 2020 round of contracts. But this summer it suddenly came with part of the action – a 10% stake.

The lesson is obvious: face China and your companies will be punished. Keep your head down and your business will be fine. Refusing to do business with Western firms is not against the law. China Mobile’s majority shareholder is a state-owned company, but the company is fictitiously private and can do business with anyone who wishes.

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