Nokia Retreats From China After Four Decades, Citing Fierce Local Competition

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A Sweeping Retreat After 40 Years

Nokia plans to lay off most of its mainland Chinese workforce and close its sites there in stages before the year is over, the South China Morning Post reported on Tuesday, citing people familiar with the matter. The report marks one of the most significant corporate withdrawals from China's telecom sector in recent memory.

The Finnish company has operated in China for more than four decades. At its peak, China was Nokia's largest single-country market anywhere in the world. That era now appears to be closing.

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What Nokia Has Confirmed So Far

A Nokia spokesperson did not deny the broader restructuring but offered limited detail. The company said it has been working to bring its China operations in line with its global business model, adding that its China revenue has fallen steadily for years.

"We are adjusting our operational footprint in China to address this reality," the spokesperson said in a statement. Nokia has not yet confirmed the full scope of the closures described by SCMP's sources.

One part of the plan is already public: Nokia is closing its research and development hub in Hangzhou, cutting roughly 1,600 jobs there. That facility develops radio technology used in the company's 5G base stations and antenna systems — core products, not back-office functions. Sources cited by industry outlet Light Reading say sites in Beijing, Chengdu, Qingdao and Shanghai may face similar closures as part of the same wave, though Nokia has not confirmed those additional cuts.

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Why Nokia Is Losing Ground in China

The numbers tell a stark story. Nokia's workforce across mainland China, Hong Kong and Taiwan has fallen from about 13,700 employees in 2020 to roughly 7,200 at the end of 2025. Its China revenue has dropped just as sharply over the same period.

The core problem is political and structural, not just competitive. China's government has spent years steering domestic telecom operators toward state-backed equipment makers like Huawei and ZTE, squeezing out foreign suppliers even when their technology is competitive. Nokia's CEO, Justin Hotard, pointed to this imbalance directly, noting that Western vendors hold less than 3 percent market share in China — while Chinese vendors like Huawei operate freely across European networks. That asymmetry, critics argue, is a direct product of Beijing's industrial policy, which favors politically connected national champions over open competition.

Nokia had already signaled the shift was coming. Late in 2025, it took full control of its joint venture Nokia Shanghai Bell by buying out its Chinese state-linked partner, China Huaxin — a move widely read at the time as preparation for exactly this kind of pullback.

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The Bigger Picture: A Divided Global Supply Chain

Nokia's retreat fits into a broader trend. Rival equipment maker Ericsson is also shifting research and manufacturing operations away from mainland China, driven by ongoing US-China tensions over telecom infrastructure and national security concerns tied to Chinese-made 5G equipment.

When Nokia reported second-quarter earnings in July, it raised its 2026 restructuring cost guidance sharply — from roughly €250 million to €800 million — with about €350 million of that earmarked specifically for the China restructuring. The company expects the moves to eventually save around €200 million a year by folding China operations into its global structure.

Investors reacted quickly to Tuesday's report: Nokia's US-listed shares fell about 4 percent in premarket trading.

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What Comes Next

Nokia has not said exactly how many jobs will ultimately be cut across mainland China, nor which sites beyond Hangzhou will close. The company says further details will follow as the restructuring proceeds through the rest of 2026.

For a company that once built its global business on Chinese manufacturing and sales, the shift underscores a wider reality: multinational tech firms are increasingly finding it difficult to compete on equal terms in a market shaped by state-directed industrial policy — and many are choosing to leave rather than keep fighting an uneven contest.

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Sources:

1. https://www.scmp.com/tech/big-tech/article/3364425/nokia-close-almost-all-sites-mainland-china-year-end-sources-say
2. https://www.lightreading.com/business-transformation/nokia-quits-r-d-in-china-and-cuts-1-600-jobs
3. https://technode.com/2026/08/17/nokia-reportedly-plans-hangzhou-rd-center-closure-affecting-1600-jobs/
4. https://finance.yahoo.com/markets/stocks/articles/nokia-shares-fall-report-major-133859441.html
5. https://www.reuters.com/world/asia-pacific/nokia-close-almost-all-sites-mainland-china-by-year-end-scmp-reports-2026-08-18/

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