Nokia’s gradual retreat from China, where it has been unable to land major contracts in the 5G era, is gathering pace. Nearly two years ago, the Finnish vendor revealed plans to cut 2,000 jobs in the country as it struggled to boost profitability in a sluggish global market for network products. By late 2025, it had taken full control of Nokia Shanghai Bell, its Chinese joint venture with state-backed China Huaxin, in what looked like a harbinger of further planned cuts. The axe has now fallen.
Latest moves will apparently shutter a research-and-development facility in Hangzhou with the loss of another 1,600 jobs, according to a source with knowledge of the matter. Screenshots shared with Light Reading also show messaging exchanges between affected employees as well as an email sent by company management about the Hangzhou site closure. There is also a suggestion that other Nokia sites in Beijing, Chengdu, Qingdao and Shanghai are to be shut down as part of the latest restructuring plans.
Nokia subsequently confirmed the Hangzhou plans in an email sent to Light Reading: “As communicated earlier, Nokia has been taking steps to better align its operations in China with Nokia’s global mode of operation,” said a spokesperson for the company. “Further, Nokia’s business in China has steadily declined over the last several years. Thus, we are adjusting our operational footprint in China to address this reality.”
Indeed, the move is not a complete surprise following earlier signals, the full takeover of Nokia Shanghai Bell last year and the more recent update when Nokia reported second-quarter results in late July. Having previously expected to incur restructuring charges of just €250 million (US$289 million) for the current fiscal year, Nokia upped guidance to €800 million ($924 million) and said €350 million ($404 million) would be related to an overhaul in China. With Nokia Shanghai Bell under its full control, it aimed to realize cost savings of about €200 million ($231 million) by integrating the China business into its global operations.
China exit
Even so, staff numbers have plummeted this decade in Nokia’s “Greater China” region, which includes Hong Kong and Taiwan. In 2020, it still employed an average of 13,700 people in the region, according to its annual report for that year. By 2025, the figure was down to just 7,200.
Over this same period, Nokia’s entire headcount has fallen from about 92,000 to 78,000 due to successive rounds of restructuring. It is down from a high point of 103,000 in 2018, two years after Nokia’s €15.6 billion ($18 billion) takeover of rival Alcatel-Lucent. Before Nokia published its second-quarter report, it looked on track to finish 2026 with about 70,000 employees, down from 74,100 at the end of last year, excluding people employed at Infinera, the optical networks specialist it bought for about $2.3 billion last year. According to its last filing with the US Securities and Exchange Commission, Infinera had about 3,000 employees before it was acquired.
What’s currently unclear is whether the China cuts form part of these overarching plans. Regardless, Nokia might now be even smaller than previously expected by the end of the year after announcing plans for more European job cuts in late July at a restructuring cost of €200 million.
“We determined that we wanted to invest a little bit incrementally in the restructuring above what we had committed to – to take advantage of some additional savings opportunities,” said Hotard on a call with reporters on July 23. “We won’t get into the headcount detail in terms of what that means, but we see this as a good investment in terms of delivering additional productivity benefits for us across the organization.”
Given that earlier plans to shrink the workforce by between 9,000 and 14,000 employees were expected to cost €800 million, the figure of €200 million for the latest European program could imply that more than 2,000 jobs are at risk.
But the Chinese retreat looks highly geopolitical in nature. During a press event held in Oulu, Finland, in September last year, senior executives said they had received notification that Nokia was to be excluded from China for national security reasons after market share losses.
Reflecting on the much bigger presence in Europe of Chinese rival Huawei, Hotard himself asked “why [do] we allow high-risk vendors in Europe in our networks, particularly when they don’t allow us to play in their markets, because we’re less than 3% of the market share in China? I think that’s important.”
Squeezed out
Sales figures back up his argument, showing Nokia’s Greater China revenues have fallen dramatically in the last few years. In 2018, Nokia made almost €2.2 billion ($2.5 billion) in regional sales. By 2025, its annual revenues there had slumped to just €913 million ($1.05 billion). The decline is mirrored at Ericsson, Nokia’s Swedish competitor, which saw its China revenues slide from 18.7 billion Swedish kronor ($2 billion) in 2020 to about SEK8.2 billion ($860 million) last year.
Despite all this, closure of R&D facilities is likely to prompt some investor concern about a potential impact on future product competitiveness. Much like Ericsson, however, Nokia has made efforts to relocate R&D and manufacturing in response to the current political situation and the widening rift between China and the US. On a comparable basis, it spent almost €4.9 billion ($5.7 billion) on R&D expenses last year, up from €4.5 billion ($5.2 billion) the year before. R&D spending for the first half of 2026 came to about €2.3 billion ($2.7 billion), a 6% increase on expenditure for the year-earlier half.
In an ideal world, Ericsson and Nokia might trade some loss of market share in Europe for a bigger role in China. It remains by far the world’s largest market for 5G network products, which are bought in vast quantities by its giant state-backed telcos, and it has undeniably been more ambitious about 5G than any country in Europe or North America. Exclusion from China is making the 5G world a lot smaller.
