Why China is pushing Nokia and Ericsson out of its telecom networks

China restricts European telecom firms

China has intensified restrictions on European telecom equipment makers Nokia and Ericsson, further squeezing them out of the market as President Xi Jinping pursues a strategy of technological self-reliance. State-backed buyers, including mobile operators and utilities, are now subjecting foreign bids to extensive “black box” national security reviews by the Cyberspace Administration of China. These reviews can last months, putting European groups at a disadvantage against Chinese rivals such as Huawei, which face no equivalent scrutiny, the Financial Times reported.

European suppliers losing market share

The tougher regime has sharply reduced Nokia and Ericsson’s presence in China’s mobile telecom networks. According to research firm Dell’Oro Group, their combined market share fell to about 4 percent in 2024, down from 12 percent in 2020. Revenues have suffered as a result, with Nokia’s sales in China declining by double digits since 2023. Industry insiders note that even when contracts are technically approved, the long delays often cause business to shift to Chinese vendors.

National security law and localization rules

The shift accelerated after China’s 2022 update to its cybersecurity law, requiring all purchases deemed relevant to “critical information infrastructure” to undergo security checks. Bidders must now disclose detailed information on every component, the share of local content, and even Chinese research and development contributions. The CAC then directly informs state-owned buyers whether purchases may proceed, effectively granting it control over market access.

Europe’s uneven response

China’s restrictions mirror the steps taken in Europe against Huawei and ZTE, though with far greater impact. The European Commission urged member states five years ago to block “high-risk suppliers,” but only 10 of 27 EU countries had imposed meaningful restrictions as of mid-2025. Cost considerations and fears of straining ties with Beijing have slowed progress. Huawei and ZTE still hold between 30 and 35 percent of Europe’s mobile infrastructure market, only a modest decline from 2020 levels.

Germany’s continued reliance on China

Germany stands out for its heavy dependence on Chinese telecom gear. Analysts note that nearly 60 percent of its 5G equipment comes from Huawei or ZTE, including all of Berlin’s mobile infrastructure. While Germany has pledged to phase out high-risk suppliers by 2029, its powerful industries, particularly automotive and chemicals, have resisted moves that could strain economic ties with China.

Mounting pressure on European firms

The European Chamber of Commerce in China has described the localization requirements as an “existential threat” to European technology groups. Nearly three quarters of its members reported losing business due to the restrictions. With Chinese state buyers tilting decisively toward domestic vendors, the prospects for Nokia and Ericsson in China appear increasingly bleak.