Chinese telecommunications giant Huawei suspended some of its operations in Russia this week, visibly nervous that Western sanctions against Russia for its invasion of Ukraine would become a crushing burden if added to US sanctions already. imposed on the company.
“Huawei laid off some of its staff at its Moscow office for a month in April after suspending all market orders, according to the report released last week and citing unnamed sources. The company also cut jobs at the marketing department, but Chinese employees still came to the office, according to the report,” said the South China Morning Post (SCMP) reported on Tuesday.
Russian media further reported that Huawei had “suspended new contracts since the end of March for the supply of network equipment to Russian operators”.
the SCMP noted that many Chinese companies have maintained operations in Russia, reassured by the “increasingly close” relationship between Beijing and Moscow. Some are willing to risk secondary sanctions to maintain their business in Russia, while others are looking for strategies to avoid triggering those sanctions. Huawei, for example, could “reassess its product portfolio in Russia and continue to sell equipment made without American technology”.
The full extent of Huawei’s business in Russia is not publicly known, but the SCMP noted that it has reached an agreement with the main Russian telecommunications company MTS to launch 5G services throughout the country and has provided 3G and 4G equipment to most of the major Russian mobile companies.
Yang Guang, senior technology analyst at Strategy Analytics, postulated that Huawei had waited to make major decisions until its main rival for the Russian market, Swedish manufacturer Ericsson, made a move. Ericsson announced it would suspend operations in Russia indefinitely on Monday, and Huawei now appears to be winding down operations as it looks for ways to avoid exiting Russia altogether.
Monday, Forbes reported Huawei suspended new orders from Russia and laid off all its Russian staff for at least a month. Previous reports noted Huawei would only lay off part of its staff.
Huawei declined to comment on the report or provide additional information, but Forbes cited public documents to estimate that the company has at least 1,200 employees working in the Russian market, 80% of whom are locals.
“Experts say they expect Huawei to find a way to continue supplying Russia during this month. These could include the use of intermediaries in third countries – aided by the recent legalization by Russia of parallel imports – or the transfer of intellectual rights on its products to Russian companies”, Forbes wrote.