Nokia Winds Down Its China Business: By the End of 2026, the Company Will Close Most of Its Divisions and Cut Staff

According to South China Morning Post, the Finnish corporation Nokia intends to close the majority of its divisions in the People's Republic of China by the end of the current year, 2026, and to phase out its local workforce. The decision to exit a market where the company has been present for more than 40 years is attributed, according to experts, to intense competition from local players. The cuts will affect employees working in both the mobile networks segment and the network infrastructure sector as a whole. The bulk of the workforce optimization measures is to be completed by the end of the year.

Scale of Presence and Severance Terms

As of the end of last year, Nokia had approximately 7,200 employees across the PRC, Hong Kong, and Taiwan combined. The exact share of staff who will lose their jobs specifically in mainland China was not disclosed at the time of publication. The company's offices operate in five major PRC cities, including Beijing and Shanghai. The Nokia research center in Hangzhou alone employed around 1,600 people, and, by estimates, the majority of them risk losing their jobs. Already dismissed employees of the Chinese divisions reported that their severance pay is calculated using the "N+3" formula, where three additional monthly salaries are added to the number of years of service (N). Some Chinese specialists were transferred to work at the Finnish headquarters.

The Economics of the Exit: Revenue Decline and Subsidiary Integration

The financial trend in China has been steadily deteriorating: since 2019, Nokia's revenue in this market has fallen by nearly half — to €913 million — while the region's share of the company's global revenue dropped from 7.9 to 4.6 percent. Meanwhile, in 2010, China was Nokia's largest sales market with revenue of €7.62 billion. During the 5G network expansion in recent years, the Finnish company rapidly lost ground to China's Huawei Technologies and ZTE. Since the end of last year, Nokia has solely owned its Chinese subsidiary, having bought out Huaxin's stake; integrating this business will cost the company €350 million in the current year alone. Going forward, Nokia expects to save €200 million annually and to complete the integration of its Chinese "subsidiary" in a couple of years, faster than originally planned.

Contradictory Data

There is a notable discrepancy between Nokia's official rhetoric and expert assessments. In its comments, the company merely noted that its business in China "has been in decline for a long time," so the scale of local operations "should be adjusted to reflect new realities," and declined to comment on the closure of divisions and the layoffs. Experts, however, interpret the retention of only after-sales equipment maintenance specialists in the country as equivalent to a phased exit from the market. Moreover, open sources provide no single figure for the share of staff being cut: only the total number of employees in the PRC, Hong Kong, and Taiwan (around 7,200) is known, but not the distribution of layoffs by territory and business line.

Historical Context and the Trend Among Western Companies

Nokia has been present in the PRC since 1985, when its representative office was opened in Beijing. In the 1990s, the company actively participated in developing the national communications network infrastructure, and its mobile devices were quite popular in the local market. However, in recent years, against the backdrop of growing competition and the PRC infrastructure's shift toward import substitution, Western corporations are increasingly forced to wind down their local operations. To one degree or another, similar steps have already been taken by IBM, Microsoft, and Amazon, making Nokia's exit part of a broader trend of Western business reevaluating its presence in the Chinese market.