Ericsson’s Backing of Huawei Shows How Companies Become ‘Hostages’ to the CCP

CEO of Swedish telecom giant Ericsson Borje Ekholm answers journalists' questions after presenting the company's fourth quarter and 2019 full year result at the Ericsson headquarters in Stockholm, Sweden, on Jan. 24, 2020. Fredrik Sandberg/TT News Agency/AFP via Getty Images

News Analysis

Telecommunications giant Ericsson didn’t enjoy the benefits of a ban of its rival Huawei in Sweden; instead, it’s been asking the Swedish government to reconsider the ban. An analysis suggests the profits gained from the Chinese market left the company susceptible to coercion by the Chinese Communist Party (CCP).

As the United States and the UK led the campaign to exclude CCP military-related companies from deals with 5G networks globally, the top beneficiary of that decision, Ericsson, reported net profits (pdf) soared to SEK 17.6 billion ($2.1 billion) in 2020 versus SEK 1.8 billion ($215 million) in 2019.

However, Ericsson Chief Executive Borje Ekholm lobbied Swedish authorities to ease the ban on Huawei. The text was obtained by a Swedish newspaper, The Local, in January 2021.

Ekholm told The Local in the interview that 8 percent of Ericsson’s revenue was from the Chinese market but only 1 percent from Sweden’s.

The corporation’s 2020 report included a statement of “risk” from Huawei’s ban in Sweden and listed 11 potential adverse impacts, including reduced or lost market share.

He called the decision “a complication” for Ericsson.

Last year, Chinese tech giant Huawei Technologies Corp. was hit with frequent setbacks, even in small European countries. Sweden barred Huawei and ZTE from its 5G network on Oct. 20, 2020, for security concerns.

Two days later, the regime’s ambassador Gui Congyou explicitly threatened in the interview that Swedish companies operating in China would be “negatively affected” even though he refused to use the word “retaliation.”

Elisabeth Braw, a fellow at the American Enterprise Institute, described the approach the CCP used in Ericsson’s case as a “corporate hostage-taking” in an analysis on Foreign Policy.

Through economic coercion, CCP authorities advance their political agenda globally.

Western governments “face losing major companies or losing their independence from business interest,” Braw said.

The CCP understands even minor curbs “provokes large multinationals and business associations to lobby their governments for foreign-policy change,” Luke Patey, the senior researcher at the Danish Institute for International Studies, wrote on Foreign Policy.

HSBC’s Dilemma

London-based global banking giant HSBC, which profits grow primarily from Asia and Hong Kong, was caught by the Party taking a political stance in Hong Kong in the summer of 2020.

Pro-democracy protesters sit outside HSBC in the Kowloon district of Hong Kong on Aug. 11, 2019. Anthony Wallace/AFP via Getty Images

HSBC hoped to remain neutral and silent on politics during the first few days when the regime imposed the national security law in Hong Kong on May 28. The law was viewed as a tool to crush political dissent to Beijing’s one-party rule. Slashed by the Party’s mouthpiece, the bank’s Asia-Pacific head Peter Wong’s pro-Beijing petition signing finally came on June 3.

The state-run Beijing Daily issued the warning titled “Swindling Clients, HSBC Would Eventually Lose All the Clients” on the Chinese social media platform on June 1. The next day, CCP’s official newspaper, People’s Daily, forwarded the commentary.

It threatened HSBC by saying there was no chance to “gain profits from Chinese people” on land controlled by the Party while standing on the side of Western countries.

The article also blamed HSBC for conducting an internal investigation into Huawei, which the U.S. Department of Justice used as evidence to bring charges against the company’s CFO Meng Wanzhou.

HSBC’s endorsement did not appease the mouthpieces. “HSBC’s silence on the issue in the past week is worth noting. In this sense, Wong’s support comes late,” the English-language mouthpiece of the CCP, Global times, said on June 4.

The situation for HSBC was more serious. Over 90 percent of profits in the retail banking and wealth management unit were generated in Hong Kong in the first six months of 2019.

In February 2020, it announced that it was expanding its Asian presence and cutting of its operations in Europe and the United States. In 2020, almost 100 branches were shuttered.

Later in 2020, HSBC froze the account belonging to Ted Hui, a key figure in Hong Kong’s democracy movement, and that of his wife and parents, shortly after Hong Kong police accused him of misappropriating funds and money laundering. The former member of the legislative council and his family arrived in the UK in December 2020 after fleeing Hong Kong.

His account was partially unfrozen for a short time, and then it was frozen. HSBC came under fire outside of China for complying with the regime.

The pressure HSBC suffered exemplifies the unavoidable circumstance any corporation will face that wants “a piece of the mainland Chinese market,” Fan Yu, an expert in finance and economics, wrote on June 10, 2020.

The implication being that global companies will become increasingly embroiled in a rift between the Chinese regime and the West.

Censoring Academic Publications

The CCP has taken the same approach to the academic world—Party control through the same economic approach.

Wu Jo-hsuan, a Taiwanese doctor, found herself facing a dilemma—either adding the word “China” after “Taiwan” in her academic paper or being rejected for publication in the medical journal Eye and Vision.

In September. 2020, the editorial team at Eye and Vision, a publication by Springer Nature a company based in the UK, explained to Wu the nationality requirement is the editorial policy, according to a report by Radio Free Asia (RFA) on Sep. 1, 2020.

In a written response to RFA, Springer Nature Group explained that the Eye and Vision operate under a separate set of editorial guidelines from its other publications. Eye and Vision works in partnership with Wenzhou Medical University in China.

According to the Affiliated Wenzhou Medical University’s official website, Eye and Vision is actually sponsored by the state-funded Wenzhou Medical University.

Early in 2017, Springer Nature, whose publications include Nature and Scientific American, was criticized for bowing to the CCP. The SpringerLink website deleted articles from its mainland site with topics the Party considers sensitive, including Taiwan, Tibet, Xinjiang, and human rights, although it claimed to be the only way to go through the regime’s sophisticated online censorship mechanism.

Springer Nature explained in a statement to the Associated Press at the time that if it had not selectively blocked access to the politically sensitive articles, access to its SpringerLink website inside China could have been cut by China’s “Great Firewall.”

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.