China’s telecom equipment market is witnessing a sharp shift in dynamics as European vendors Nokia and Ericsson continue to lose share to domestic champions Huawei and ZTE. New procurement rules and tightened restrictions on foreign vendors are accelerating this decline, giving Chinese suppliers a decisive advantage in their home market.
China is tightening controls on the use of European telecom suppliers Nokia and Ericsson, marking a significant escalation in Beijing’s efforts to reduce reliance on Western technology. Under President Xi Jinping’s push for self-reliance in critical infrastructure, foreign vendors now face stricter scrutiny, leaving them at a competitive disadvantage against domestic rivals Huawei and ZTE.
China’s Telecom Restrictions on Foreign Vendors
Chinese state-backed buyers, including mobile operators, utilities, and critical industries, have been ordered to subject contracts with foreign equipment makers to national security reviews by the Cyberspace Administration of China (CAC), Financial Times reports.
These reviews, often lasting three months or longer, are conducted as “black box” audits where Nokia and Ericsson receive no transparency on evaluation methods.
Even when approvals are granted, the delays and uncertainty give Chinese vendors a clear edge in winning contracts.
The combined Capex of China Mobile, China Telecom, China Unicom in 2024 is estimated at RMB 319 billion, with inclusion of tower infrastructure (China Tower) putting total telecom-related capital spend closer to RMB 351 billion for that year.
The total Capex of the major operators (excluding tower infrastructure) is forecast at about RMB 289.8 billion in 2025.
Nokia Revenue Decline in China
Nokia’s financial performance in Greater China has been hit hard over the past year. According to its 2024 annual report, the company generated revenue of €1.134 billion, a 13 percent decline compared with €1.303 billion in 2023.
Despite employing 8,700 staff in Greater China at the end of 2024, Nokia’s market position has weakened. The company faces growing challenges as Chinese operators increasingly prioritize local vendors for critical telecom infrastructure projects.
Ericsson Revenue and Workforce Cuts
Ericsson has also seen its revenue base erode in China. The Swedish telecom equipment maker reported SEK 10.221 billion in revenue in 2024, down from SEK 10.716 billion in 2023 and SEK 10.523 billion in 2022.
The company has significantly reduced its local workforce, cutting the number of employees to 8,136 in 2024 from 9,950 in 2023 and 10,971 in 2022. With tenders shifting heavily toward Chinese firms, Ericsson’s footprint in the world’s largest telecom market continues to shrink.
Huawei and ZTE Expand Their Edge
While European vendors lose ground, Huawei and ZTE are consolidating their leadership. These companies benefit from strong domestic demand, faster approvals in procurement, and a growing role in supporting China’s digital infrastructure buildout.
Huawei remains a dominant player, while ZTE has steadily gained share across both mobile and fixed network segments. Together, the two Chinese companies now control the majority of contracts for 5G rollouts and critical telecom upgrades in the country.
Market Share Trends: A Widening Gap
According to Dell’Oro Group, Nokia and Ericsson’s combined share of China’s telecom market dropped to around 4 percent in 2024, compared with 12 percent in 2020. In contrast, Huawei and ZTE continue to hold commanding positions, securing the bulk of operator investments.
The result is a widening technology gap: while European vendors face uncertainty and delays in project approvals, Chinese suppliers are able to deliver faster and more competitively priced solutions.
The European Dilemma
Interestingly, the situation is mirrored in Europe. Despite growing security concerns, Huawei and ZTE still control 30–35 percent of Europe’s mobile infrastructure market, only slightly down from 2020 levels. Germany, for instance, still relies on Chinese vendors for nearly 59 percent of its 5G network equipment.
This creates a two-way challenge: European companies are restricted in China, while Chinese firms remain embedded in European markets.
Outlook for Nokia and Ericsson
For Nokia and Ericsson, the shrinking market share in China is both a strategic setback and a signal to diversify. Growth opportunities may increasingly come from North America, India, and parts of Europe where governments and operators are investing in vendor diversification and open RAN technologies.
Meanwhile, Huawei and ZTE are poised to deepen their dominance in China and expand their influence in emerging markets, reinforcing a clear divide in the global telecom landscape.
Baburajan Kizhakedath
