To protect its economy and strategic companies, China enforces a wide set of rules that regulate and restrict foreign companies from doing business there. After acquiring Alcatel-Lucent, Nokia faced a little complicated situation in China where the Company became the owner of Alcatel shares in Alcatel-Lucent Shanghai Bell Co. joint venture between Alcatel-Lucent and China Huaxin, government’s investment company.
For almost 2 years, Nokia was negotiating with China Huaxin to create a new joint venture that would combine Nokia China and Alcatel-Lucent Shangai Bell that is now partially owned by Nokia, with the rest of the shares being owned by China. The two companies, Nokia China and A-LU Shangai Bell were operating as a single entity since 2016, and now China Huaxin finally agreed to create a new joint venture called “Nokia Shanghai Bell”. Nokia owns 50% + 1 share of the new joint venture, while the government’s Huaxin owns the rest. The new company includes 16,000 personnel, with 10,000 researchers, working across six R&D sites in China. Nokia notes that the new venture will represent a major part of Nokia’s overall Greater China Business.
Rajeev Suri, President and CEO of Nokia Corporation, said: “Today’s agreement is historic for Nokia and for China, marking the next step of our decades-long commitment to the country and underscoring China’s leading role in developing next-generation communication technologies. Nokia Shanghai Bell will enhance our ability to innovate, helping us strengthen ties with communication service providers and expand to new, fast-growing sectors in need of high-performing networks.”
Yuan Xin, General Manager of China Huaxin, said: “We are fully confident in the new joint venture’s success during the industry transformation brought by the new technologies like 5G and IoT. The successful combination globally and in China brings together the leading E2E network technologies and most powerful innovation engines from both sides. We’re excited to work with Nokia to establish a future-oriented innovative technology company, with a win-win cooperative model for the bigger success in the new era.”
One of the biggest problems for combining Alcatel’s and Nokia’s China business was a regulation in which foreign companies are allowed to claim a maximum of 11% of wireless infrastructure market, and both Alcate and Nokia held 11% prior creating the new joint venture. We don’t know if China allowed Nokia Shangai Bell to claim the combined 22% marketshare it theoretically has, but I guess, since the government now owns 50%-1 share of Nokia Shangai Bell, that such a decision was made. We contacted Nokia with an inquiry and will update the article when an answer arrives.