Chinese telecom giant Huawei suspended some of its operations in Russia this week, evidently nervous that Western sanctions against Russia over its invasion of Ukraine would become a crushing burden if added to U.S. sanctions already imposed on the company.
“Huawei has furloughed part of its staff in its Moscow office for a month in April after suspending all orders in the market, according to the report, which was published last week and cited anonymous sources. The company has also cut jobs at the marketing department, but employees from China still came into the office, according to the report,” the South China Morning Post (SCMP) reported Tuesday.
Russian media additionally reported Huawei has “suspended new contracts since the end of March for supplying network equipment to Russian operators.”
Residents look at a destroyed Russian tank on the outskirts of Buzova village, west of Kyiv, on April 10, 2020. (SERGEI SUPINSKY/AFP via Getty Images)
The SCMP noted that many Chinese firms have maintained their operations in Russia, reassured by the “increasingly close” relationship between Beijing and Moscow. Some are willing to risk penalties from secondary sanctions to keep their Russian business flowing, while others are seeking strategies to avoid triggering those sanctions. Huawei, for example, may “reassess its product portfolio in Russia and continue to sell equipment made without U.S. technology.”
Russian President Vladimir Putin (L) and Chinese President Xi Jinping (R) toast at the Diaoyutai State Guesthouse in Dushanbe on June 15, 2019. (ALEXEI DRUZHININ/AFP/Getty Images)
The full extent of Huawei’s operations in Russia is not public knowledge, but the SCMP noted it made a deal with top Russian telecom company MTS to launch 5G services across the country and has supplied 3G and 4G equipment to most of Russia’s big cell phone companies.
Strategy Analytics senior tech analyst Yang Guang postulated Huawei has been holding off on making any major decisions until its chief rival for the Russian market, Swedish manufacturer Ericsson, made a move. Ericsson announced it would suspend its Russian operations indefinitely on Monday, and Huawei now appears to be scaling back while it looks for ways to avoid leaving Russia entirely.
On Monday, Forbes reported Huawei suspended new orders from Russia and furloughed its entire Russian staff for at least a month. Previous reports indicated Huawei would furlough only a portion of its staff.
Huawei refused to comment on the report or provide additional information, but Forbes cited public documents to estimate the company has at least 1,200 employees working the Russian market, 80 percent of them locals.
“Experts say they expect Huawei to find a way to continue supplying Russia over the course of this month. These could include using intermediaries in third countries – helped by Russia’s recent legalization of parallel imports – or transferring intellectual rights to its products to Russian companies,” Forbes wrote.
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