Ericsson shows there’s life beyond China

2 minute read

An Ericsson logo is pictured at Mobile World Congress (MWC) in Shanghai, China June 28, 2019. REUTERS/Aly Song

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LONDON, Jan 25 (Reuters Breakingviews) - Ericsson (ERICb.ST) has met China’s cold shoulder with a shrug of its own. Shares in the $37 billion Swedish telecoms equipment maker rose 8% on Tuesday after it revealed positive overall sales growth in the last three months of 2021, even as it lost ground in the world’s biggest market. For other companies navigating the increasingly choppy waters between West and East, it’s an important reminder that the latter doesn’t have a monopoly on growth.

Chief Executive Börje Ekholm’s Middle Kingdom headaches date back to 2020 when Stockholm, under U.S. pressure, red-carded Chinese rival Huawei Technologies. Beijing’s retaliation is now hitting home. Ericsson’s sales in China, which a year ago accounted for 8% of its top line, fell by over $800 million, amounting to only 3% of its total for the year. However, that was more than offset by North America. Aided by 5G rollouts, sales in the region, which accounts for nearly a third of Ericsson revenue, jumped 17% in the final quarter. Ericsson investors will hope Ekholm’s Chinese shock keeps spurring him to find alternative drivers. (By Ed Cropley)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by George Hay and Oliver Taslic

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