Oct 22, 2020 04:10 AM

China Warns Swedish Companies Could Suffer From Huawei Ban

A branded perspex comments box sits on a product display table inside a Huawei Technologies Co. store at Menlyn Park Shopping Center in Pretoria
A branded perspex comments box sits on a product display table inside a Huawei Technologies Co. store at Menlyn Park Shopping Center in Pretoria

(Bloomberg) — The Chinese Foreign Ministry warned Sweden that it should revoke its ban on Huawei Technologies Co. to avoid hurting prospects for Swedish companies.

Swedish authorities blocked operators from using Chinese vendors Huawei and ZTE Corp. as part of the country’s 5G wireless network rollout. The decision was the latest in a series of restrictions by governments around the world on the Chinese companies under continued pressure from the U.S. over potential security risks in 5G networks. China was Sweden’s eighth-largest export market in 2019, according to Sweden’s official statistics agency.

“The Chinese market is open to European companies including Swedish companies, but the Swedish side without any evidence has discredited China and cracked down on China’s telecom companies,” Chinese Foreign Ministry spokesman Zhao Lijian said Wednesday in a press briefing.

“Sweden should adopt an objective and fair attitude and address its wrong decision so as to avoid negative impacts to normal economic and trade cooperation between the two sides and avoid bringing any negative impacts to Swedish companies’ operations in China,” Zhao said.

Huawei said it is disappointed with the Swedish government’s decision.

“Huawei has no ability or intention to pose any threat to Sweden's security,” the Chinese company said in a statement. “Huawei will carefully evaluate the impact of the decision on local businesses and continue to seek further communication with the Swedish government.”

Huawei’s biggest rival in the market for cellular radio equipment, Sweden’s Ericsson, is building the next generation of wireless technology for all of China’s three major mobile phone operators and derives about 10% of its sales from China. The company reported earnings Wednesday that were stronger than analysts expected as the Chinese contracts started contributing to profits after initially losing money.

According to the Swedish Security Service, allowing Huawei or ZTE products could be detrimental to national security as “Chinese state and intelligence services can influence and exert pressure” on the companies. Swedish Prime Minister Stefan Lofven said the decision nevertheless shouldn’t be seen as directed against China.

“The whole purpose of the legislation we have introduced is to ensure Sweden’s security,” Lofven told news agency TT. “It is then up to authorities to assess what can be done and what can’t. And of course we trust the authorities’ assessment.”

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