Summary of Key Points
Nokia is undergoing significant business restructuring in China: It plans to close its R&D center in Hangzhou, which employs around 1,600 people, and also downsizes its factories in Beijing, Chengdu, Qingdao, Shanghai, and other locations. Employees in Shanghai have reported that the layoff rate could be as high as 80%-90%, with some possibly being transferred to Luxshare Precision. The compensation package offered includes N+2 (two months' salary for each year of service) or N+3 (three months' salary). This move is part of Nokia's global reorganization, which involves integrating its Chinese operations into its global framework. It also reflects the decline in China's competitiveness in the 5G market (with a market share of only about 4%) and the company's strategic shift towards AI and cloud services. The once-great enterprise, Shanghai Bell, is now gradually fading amidst these industrial changes.
How Severe Is This Reorganization?
Nokia's reorganization is no small matter:
- Hangzhou R&D Center Hit First: The center is being directly closed, affecting 1,600 employees, and this is just the beginning.
- Shanghai Campus on the Decline: The northern part of the Pudong Jinqiao campus is deserted, while the southern part is still operating, but employees say it may cease operations by the end of the year. There are currently one to two thousand employees (with a peak of three to four thousand), and layoffs occur monthly.
- Alarming Layoff Rates: Employees estimate that 80%-90% of positions in Shanghai will be cut, with compensation plans still under negotiation. Some employees may receive N+2 or N+3 as part of the severance package.
- Possible Transfer to Luxshare Precision: There are rumors that some employees might be transferred to Luxshare Precision's new R&D center in Shanghai, but this has not been officially confirmed.
- Business Continues: Despite the layoffs, ongoing projects will proceed as usual, though the atmosphere among employees is one of uncertainty.
Why the Sudden Cuts to Chinese Operations?
Nokia's decisions are not random:
- Global Downsizing: The company plans to reduce its workforce from 30,000 in October 2018 to 78,000 by 2025, with reorganization costs increasing from 250 million euros to 800 million euros in 2026. Of this increase, 350 million euros are related to streamlining operations in China.
- China's Business Performance: Nokia's Chinese workforce has been halved over five years (from 13,700 in 2020 to 7,200 in 2025), mainly due to its failure to keep up with the 5G trend:
- Chinese operators require equipment manufacturers to quickly adapt their products to local frequency bands and network architectures, but Nokia's global uniform product strategy has been a bottleneck.
- Nokia's products are more expensive than those of Huawei and ZTE, resulting in fewer procurement orders. In 2024, Nokia and Ericsson together held only about 4% of the Chinese mobile network market share.
- Strategic Shift to AI/Cloud: Nokia's latest financial report shows that sales from AI and cloud services increased by 105% year-over-year in Q2 2026, while traditional mobile device business growth has been limited. As a result, Nokia is focusing on these new areas.
From a "Giant Enterprise" to a "Lost 5G Player": The 42-Year History of Shanghai Bell
Shanghai Nokia originated as Shanghai Bell, once considered the dream company for communication professionals:
- Prominent Origins: Founded in 1984, it was China's first Sino-foreign joint venture in the communications industry, with the Chinese side holding 60% of the shares and Belgium 40%. Later, Alcatel joined in, changing the ownership to 50% Chinese and 50% foreign shares, with a Chinese chairman and a foreign CEO.
- A Golden Age: Known for its excellent benefits and working conditions, it was a top choice for communication graduates. One former employee recalled that joining Bell was more prestigious than passing the civil service exam.
- Changes in Ownership: In 2016, Nokia acquired Alcatel-Lucent, and in 2017, Shanghai Bell was integrated into Nokia Bell. By the end of 2025, Nokia took full control, and in 2026, it was renamed "Nokia Communications (Shanghai)," shedding its former status as a leading Sino-foreign partnership.
The Challenges Faced by Employees
For the existing employees, this reorganization is a sudden blow:
- Age Concerns: An employee with over ten years of experience says, "Even with compensation, it's uncertain what I can find in another job at my age." The communication industry is rapidly evolving, making it difficult for older workers to transition.
- Uncertainty: Although there are compensation plans, the details are still being discussed, and the possibility of transferring to Luxshare Precision remains unconfirmed, leaving many employees unsure about their future.
- Emotional Impact: The once-bustling campus is now empty, and familiar colleagues are leaving one after another. The decline of this "giant enterprise" leaves a sense of loss.
The Industrial Context Behind the Changes
Nokia's decline in China also reflects the transformation of China's communications industry:
- A Mature Supply Chain: When Shanghai Bell was established, China relied on foreign partnerships to develop its communication technology. Now, domestic companies like Huawei and ZTE can innovate independently and even lead globally.
- Changing Global Competition: The traditional telecommunications equipment market is saturated, and giants are shifting to new areas such as AI and cloud. Nokia's focus on global standards has hindered its success in China.
- The Importance of Localization: In the Chinese market, companies that do not meet local requirements (such as frequency band and operator specifications) struggle to survive. Nokia's global approach has proven counterproductive.
This reorganization is a strategic leap for Nokia, but it represents a significant turning point in the lives of its employees. The fall of this once-great enterprise is both a result of industrial changes and a testament to the inevitability of personal adjustments in the face of changing times.