Sweden decided to ban huawei and ZTE from participating in its 5G telecom network in early 2020.
Ericsson is a world-renowned Western telecoms major and a rival to Chinese tech giant Huawei. But Ericsson’s CEO is pleading in favor of its biggest rival, Huawei, on the grounds that it “does not support free trade. This perverse incident reveals how the Chinese Communist Party plays the economic card and blackmails foreign companies in China to achieve its goals.
On January 19, Foreign Policy published an article by Elisabeth Braw, a fellow at the American Enterprise Institute, titled “How China Holds Western Tech Companies Hostage. Braw noted that in today’s global trade competition, international companies are becoming easy prey for hostile governments. As with hostages held captive by nefarious organizations, the governments and citizens of these international companies should support them so that they can escape.
Ericsson is a corporate hostage
Börje Ekholm is the chief executive of Ericsson, a Swedish company. Börje Ekholm is the CEO of Ericsson, a Swedish company, and he is worried about Ericsson’s future business because of pressure from Beijing after the Swedish government banned the use of some Chinese telecom technologies.
Swedish media reported that Ekholm had sent a text message to Swedish Trade Minister Anna Hallberg saying he was saddened by Sweden’s decision to ban Huawei and ZTE from its 5G telecoms network in early 2020. His text message to Hallberg read, “At the moment, Sweden is a very bad country indeed for Ericsson.” Ekholm expressed similar remarks in a subsequent interview: Sweden should revoke its ban on Huawei. He said, “Our soul is in Sweden, which is Ericsson’s base. But if Sweden doesn’t support free trade, that’s a problem for us.”
In his article, Burra asks, “For what exactly would the CEO of Ericsson, one of Huawei’s two biggest competitors, beg his government to reverse a decision that is clearly in his company’s favor?”
The Chinese Communist Party engages in dictatorship to play the economic card
The Chinese Communist Party is playing the economic card while engaging in dictatorship. In the case of Ericsson, the Chinese Communist Party is using 8% of Ericsson’s total revenue. One reason for Ericsson’s plea for Huawei is that Ericsson also sells products in China, Bula analyzes. 2019, China’s three major telecom operators: China Mobile, China Unicom and China Telecom, all signed agreements with Ericsson to use its technology. In the same year, the Swedish company opened a smart factory in China to produce some of Ericsson’s products, and most of Ericsson’s sales growth that year came from the Chinese market.
Bula’s analysis noted that the Chinese market accounted for 8% of Ericsson’s total revenue.
In October 2020, Sweden announced a ban on Chinese 5G technology. Chinese Foreign Ministry spokesman Zhao Lijian warned that the decision would have a “negative impact” on Swedish companies. On Jan. 4, Ekholm told a Swedish newspaper that he was under pressure from the Chinese authorities.
Bula believes the pressure could be even worse for some other Western companies. In Australia, for example, that government has banned Huawei and called for an independent investigation into the source of the CCP viruses (Wuhan virus, New Crown virus, COVID-19). The Chinese Communist Party then retaliated: last year, it imposed very harsh tariffs on Australian wine.
HSBC forced to support draconian law Zoom blackmailed into blocking online services
Ericsson is not being blackmailed by the Chinese Communist Party for its business in China. On the contrary, it is a consistent practice of the Chinese Communist Party to use the relevant interests it can control to blackmail individuals or companies. On June 1, the official Chinese media Beijing Daily warned in a WeChat article that “HSBC will eventually lose all its customers”. Finally, on June 3, HSBC expressed its support for the “Hong Kong version of the National Security Law” and included a photo of its Asia Pacific CEO, Wang Dongsheng, signing a petition in support of the legislation.
In addition to threatening Western companies in China, the Chinese Communist Party also threatens Chinese employees working in Western companies. Jin Xinjiang is a former Chinese executive at Zoom, a California-based videoconferencing software company. Last December he was accused of acting as an agent of the Chinese Communist Party’s police and state security services to spy on and interfere with Zoom’s users. The Chinese Communist Party blackmailed Zoom by blocking its online services, and Jin was appointed as Zoom’s liaison with the Chinese government and agreed to a secret “overhaul plan” with Beijing authorities.
John C. Demers, assistant attorney general for national security, said in his indictment of Jin that “companies with significant business interests in China are under the deterrent influence of the Chinese Communist Party.” He said the Communist Party is doing what it can to stifle freedom and stifle speech in China, the United States and elsewhere in the world.
Helping Western companies get out of the tiger’s mouth: out of China
It is a common tactic of the Chinese Communist Party to coerce Western countries through Western companies. However, Bula argues that there are ways Western governments can help their companies around the world circumvent this coercion: Governments can incentivize companies to move their supply chains to more secure countries.
Indeed, global companies have been slowly moving manufacturing from China to places like Vietnam and Cambodia over the past few years as manufacturing costs elsewhere have fallen. This supply chain shift has been accelerated by the Trump (Trump) administration’s imposition of tariffs on goods made in China. At the same Time, to bring more high-tech manufacturing back Home, governments can create incentives for innovation to make manufacturing more efficient.
Western governments can also support their companies in developing markets outside of China. Around the world, developing countries will also soon have 5G networks in place, Bula noted. For the Swedish government, it would only be wise to do everything possible to help Ericsson become a provider of this technology, just as the French government has done for French weapons manufacturers. And considering that Ericsson and Nokia are the only real alternatives to Huawei, both companies are crucial to Western countries, which should support both Sweden and Finland (where Nokia is located).
Three levels of global Anti-Communist united front: business, government and people
But Bula said a global united front that goes far beyond 5G is essential to truly prevent more Ekholm-style suffering. Europe opened the Northern Light Summit, an annual meeting of European business leaders, may be a start. Bula also believes that Western companies should try to remain politically neutral. Governments could also regularly update business leaders on national security developments.
Bula describes Finland’s Defense Course, a highly selective government program for up-and-coming managers, which has created a national network of leaders who understand national security.
Beyond that, Bula argues that helping strategically important companies like Ericsson, which are under Chinese Communist coercion, is fundamentally something that Western governments can acquire. Last year, former U.S. Attorney General William Barr floated the idea of the U.S. government buying controlling stakes in Ericsson and Nokia, and a major owner of Ericsson welcomed the idea.
In addition to governments and corporate executives, Western citizens have great potential as consumers. Bula noted that distrust of China (the Chinese Communist Party) is at record levels in all Western countries. According to the Pew Research Center, 73 percent of Americans, 81 percent of Australians, 74 percent of Britons, 85 percent of Swedes and 71 percent of Germans now have a negative attitude toward China (CCP).
Bula said that the Western public has great potential not only in terms of purchasing power but also in branding companies, and through their actions, companies that are restricted by the CCP will be rewarded. The Inter-Parliamentary Alliance on China (IPAC), a group of more than 200 parliamentarians from 19 countries, launched the “Buy Australian Wine Worldwide” campaign late last year. One example is the “Buy Australian Wine Worldwide Campaign”.
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