China could impose sanctions on Nokia and Ericsson should the EU ban Huawei from the rollout of 5G networks in Europe, according to reports.
Huawei has already been excluded from the UK market while there are concerns that other countries could succumb to US pressure and follow suit.
The US government considers Huawei to be a security risk despite offering no evidence to support its claims, while the company has frequently denied any allegations of wrongdoing. Nonetheless, Washington has continued with its campaign of hostility and sanctions.
China Nokia Ericsson
The EU has previously said that it would not ban member states from using Huawei in their 5G rollouts and has instead focused on cybersecurity guidelines and intelligence sharing to mitigate any potential risk. That’s not to say individual countries couldn’t take action independently.
Given the UK’s recent U-turn, China is allegedly considering a series of measures that could act as a potential deterrent. The Wall Street Journal says the Chinese Ministry of Commerce could impose export controls that would restrict Ericsson and Nokia from exporting products made in China to other countries.
Both companies stand to make significant gains from any difficulties faced by Huawei and both have production facilities in China. Ericsson also has 5G contracts with the country’s three main mobile operators.
It is said that Nokia has already started to shift some production away from China and that both companies could move elsewhere in Asia or into North America should life become difficult.
However the report did state that restrictions on the two firms would be a “worst case scenario” and its debatable as to whether they would actually be imposed. There is also the suggestion that China believes competition for domestic vendors Huawei and ZTE is a good thing as it drives innovation.
Ericsson decline to comment.