The circumstances in which Nokia Shanghai Bell (NSB) failed to secure any part of China Mobile’s recent $5.2bn tender seem to be changing on a daily basis, with NSB refuting the validity of an anonymous open letter, whilst releasing its own response from CEO Markus Borchert.
Earlier this week China Mobile announced the results of its latest round of contract negotiations for the manufacture of 230,000 5G base stations, with $4.6bn of an estimated $5.2bn going to Chinese companies, most notably Huawei (57%) and ZTE (29%).
Ericsson walked away with 11.5% of the contracts, whilst Nokia – which previously secured around 6% of business in China Mobile’s first phase of its 5G roll out – got nothing.
Letter sent to China Unicom
The original letter was sent to China Unicom, another Chinese telecoms company which Nokia was hoping to secure business from, and it outlined how a focus on low costs – clearly an area where Nokia fell down in its China Mobile bid – would be counter-productive.
"I urge leaders of China Unicom to take more consideration of the historical service performance of various vendors when formulating the bidding plan, to avoid low-cost and low-energy vendors gaining a large share, which will affect the long-term development of China Unicom's 5G business," the letter read.
However, in a follow up letter, NSB CEO Markus Borchert said that this letter did not reflect the views of NSB.
““We hereby solemnly declare that the letter ‘Nokia Bell from Shanghai to China Unicom on March 31’ circulating online recently does not represent our position and attitude,” Borchert said.
On the decision by China Mobile to work exclusively with Ericsson outside of China, Borchert said: “We accept and respect China Mobile ’s decision. We need to emphasize that we will continue to serve China Mobile unswervingly. China Mobile ’s strategy as one of our most important partners remains unchanged.”
The bidding process appears to sit at the heart of any ongoing friction between NSB and China Mobile, but the fact that Ericsson was able to secure over 10% of the $5.2bn tender shows that companies outside of China are still able to compete, but that they need to remain realistic about price.
“The outcome is a reflection of the market reality as much as it is of the political reality,” explained Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, in an interview with the FT.
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