On October 17th, Bloomberg reported, citing informed sources, that telecommunications giant Nokia has cut nearly 2000 jobs in China as part of its massive cost cutting plan to cope with the sluggish telecommunications equipment market.
The insider said that this layoff is part of a large-scale layoff plan announced by Nokia last year, which aims to lay off up to 14000 employees. According to Nokia's financial report, as of the end of 2023, Nokia has approximately 10400 employees in Greater China and 37400 employees in Europe.
In addition, Nokia plans to cut another 350 jobs in Europe in the near future, and the continuous layoffs are putting pressure on the company's performance. A reporter from China Business News noticed that due to the postponement or reduction of expensive infrastructure upgrade plans by telecom operators, sales of established telecom giants such as Nokia and Ericsson have been impacted, and they have been cutting costs recently. In China, the world's largest 5G market, European companies are not as competitive as local competitors such as Huawei and ZTE.
The reporter contacted and interviewed Nokia regarding the relevant issue, but did not receive a positive response from the other party. However, a Nokia spokesperson recently stated that Nokia's total market share in the Chinese device market is less than 5%. As a result, the company has been reducing its business in China and earlier this year sold a portion of its equity in a joint venture with Huawei in China.
Continuous weight loss
This time, Nokia has laid off nearly 2000 employees in Greater China, accounting for about 20% of the total number of employees in the region. This is not the first time Nokia's Greater China region has reported layoffs.
As early as July this year, it was reported that Nokia's Nanjing R&D center would close in August. According to Nokia's official website, over 600 employees have resigned in Nanjing this time.
After the news of layoffs in Nanjing was exposed, some industry insiders claimed that Hangzhou companies were also affected: "Half of the employees will be retained in Hangzhou at the end of the year, and the rest will be left to next year" "It seems inevitable" "Hangzhou should retain some employees to maintain 5G post production and customer business".
On the job search community platform Maimai, the reporter saw that some insiders claimed that Nokia is now the communication equipment department of the old Nokia, plus the communication departments of Siemens and Lucent. In recent years, the communication industry has experienced severe internal competition and declining profits, so it is necessary to apply for group membership for warmth.
The above-mentioned insider said that there were also reports last year that employees of Shanghai Nokia Bell Software Co., Ltd. were asked to resign, and if they did not agree, they would have to transfer to Qingdao and other places.
A Nokia spokesperson stated that as part of its broader plan, the company has laid off 7500 employees and stated that it has reduced costs by 500 million euros so far.
The reason for layoffs is very simple. If business and expectations are not good, we need to tighten our belts to overcome the difficulties. "A telecommunications industry insider told reporters that due to cautious investment in global telecommunications equipment and intense industry competition, Nokia's overseas 5G market expansion has fallen short of expectations, making it difficult to do business. Nokia also hopes to save approximately $1.2 billion in costs through layoffs.
The communication industry insider said that considering Nokia's gradual withdrawal from the mobile phone business and the prominent development in the communication network field, this large-scale layoff has attracted high attention from the industry.
It is worth mentioning that Nokia has also made business adjustments in Europe. Nokia has informed European unions that it will lay off an additional 350 employees in Europe, including 48 at its headquarters in Finland. This series of layoffs demonstrates Nokia's strategic contraction trend on a global scale.
Nokia's layoff plan is still ongoing. A Nokia spokesperson stated that the company plans to reduce the number of employees from approximately 86000 at the time of announcing layoffs to between 72000 and 77000 by 2026. Currently, Nokia has over 78500 employees.
Performance under pressure
In recent years, facing strong competition from domestic rivals such as Huawei and ZTE, the market share of established communication giants such as Nokia and Ericsson has been continuously compressed, and their performance continues to be under pressure.
As early as 2020, the pressure on Nokia's communication business had already increased significantly. In just two months, Nokia suffered consecutive losses in major orders such as PON, transmission, routers, and 5G.
On March 31st of that year, China Mobile centralized the procurement of 5G Phase II wireless network main equipment in 2020, and Nokia was not included in the list. On April 24th, during the 5G centralized procurement of China Telecom and China Unicom, Nokia once again shut down and withdrew from the market. Nearly 70 billion yuan worth of orders were divided among Huawei, ZTE, Ericsson, and China Information Science and Technology Corporation (Datang Mobile), while Nokia still failed to receive any revenue.
There are many reasons, but the most important one should be that Nokia's own products and solutions have not met customer requirements or lack advantages compared to competitors, "said the communication industry insider.
For a long time, Nokia's research and development focus has mainly been on 5G millimeter wave and the European and American markets, with less investment in customized products using technologies such as 5G spectrum in China. Meanwhile, Huawei, ZTE, and others are actively launching various competitive products targeting the domestic market. Moreover, Nokia's supply capacity also has some shortcomings. Previously, South Korean media reported that the delay of Nokia's 5G equipment supply for three months has dragged down the progress of 5G construction in South Korea.
In China, the world's largest 5G market, Nokia is losing to local competitors such as Huawei and ZTE. Previously, a Nokia spokesperson admitted that Nokia's total market share in the Chinese telecommunications equipment market is less than 5%.
Once upon a time, Greater China was Nokia's second largest market. In 2019, approximately 27% of Nokia's net sales came from Greater China, but in the most recent quarter, this proportion has dropped to less than 6%.
On October 17, 2024, Nokia announced its third quarter financial report for 2024, with net sales of 4.33 billion euros, a year-on-year decrease of 8%, lower than analysts' widely expected 4.73 billion euros. Adjusted operating profit was 454 million euros, a year-on-year increase of 9%. Nokia announced on the same day that its third quarter sales fell short of analysts' expectations, stating that the recovery was slower than expected and disclosing the news of layoffs.
It is worth noting that another European telecommunications giant Ericsson is also implementing a large-scale cost cutting plan, announcing plans to lay off 8500 employees last year.
Under the wave of globalization, no region or enterprise can stand alone. Only by strengthening communication and cooperation can we promote the development of enterprises, "said the communication industry insiders. For enterprises, enhancing the competitiveness of their products and services is fundamental.