Country is visiting | President of Ericsson China: epidemic spreads, global 5G demand is not weakened
Under the epidemic, the global economy pressed the pause button.
Will 5G construction, one of the economic engines of the future, be suspended because of this? What impact did the epidemic have on the global communications industry? What challenges does China ’s 5G “new infrastructure” face?
Zhao Juntao, president of Ericsson China, recently accepted a direct train interview with China News Agency.
Ericsson global supply chain, China has an important position
China is a through train: Ericsson has 11,000 employees in China and 26 provincial companies. How did the outbreak affect Ericsson? What is the status of resumption and production?
Zhao Juntao: Ericsson's business operations in China include production, delivery, sales, research and development, etc. The company has branches in 26 provinces in the mainland. The overall impact of the outbreak on our operations is also relatively large.
Ericsson has two production bases in China, one of which is Nanjing Ericsson Panda Communication Co., Ltd., which is also Ericsson's largest wireless communication equipment manufacturing plant in the world. The resumption of Ericsson's Nanjing plant was strongly supported by Jiangsu Province, Nanjing City, and Jiangning Technology Development Zone, where the plant is located. On February 10, it became one of the first batch of Nanjing companies to resume work. On February 19, the main leaders of Jiangsu Province and Nanjing came to our factory to inspect, provide guidance, and provided support, which made us very encouraged.
The main business direction of the factory in Shenzhen is wireless base station filters, antennas and other equipment. The work resumed on February 14 and also received the support of Shenzhen and its district administrative departments. Both factories are now returning more than 90%.
Ericsson has opened offices in various locations since February, including R & D centers in Beijing, Shanghai, Guangzhou, Nanjing, and Chengdu. At present, more than 5,000 R & D employees have reached 90% of their posts. They are all engaged in the most urgent 5G-related projects in the world and China.
China is a through train: So far, how is the overall resumption of the communications equipment industry chain?
Zhao Juntao: On February 19th, Ericsson Group sent a letter to the Chinese Embassy in Sweden requesting support for the company's supply chain resumption in China. The embassy took this matter very seriously and reported it to the country as soon as possible. Under the coordination of relevant departments, until February 25, the core supplier list provided to the embassy was basically resumed. We thank the Chinese embassy and relevant Chinese government departments.
At present, the resumption of production by our core suppliers is okay, but since these core suppliers are mostly small and medium-sized enterprises, it is more difficult for them to resume production and resume production than for large enterprises. Due to travel restrictions, the employment rate of small and medium-sized enterprises is still insufficient, and it is difficult for enterprises to afford 14-day isolation of employees, which is the main difficulty. But great progress has been seen.
China is a through train: What is the share of Chinese suppliers in Ericsson's supply chain?
Zhao Juntao: China occupies an important position in Ericsson's global supply chain. The supply of some of our components has reached 80% -90% in China. Ericsson has several factories worldwide, and some components are very important to us. At present, there is a lot of progress in resuming work and production, but it feels that it will take time to fully return to normal, especially with the intensification of the second wave of foreign epidemics, the entire process may take longer.
China is a through train: At present, the epidemic is spreading abroad, and no signs of improvement have been seen. How much influence will it have on the global mobile communications industry?
Zhao Juntao: This is the next severe test. It is the test of our entire mobile communications industry.
The first level is whether the global supply chain can withstand this shock and meet the needs of the market and customers. The Ericsson plant is not only located in Nanjing, but also has several major supply bases worldwide. One of our basic principles is to produce as close to the main markets and customers as possible. Make our global supply chain flexible and resilient to withstand shocks. Such a layout decision appears to be correct.
The second level is whether we can meet the needs of this market. If the demand is still there, we will make some adjustments from the supply chain layout and suppliers. In China, with the help of the central government and local governments, our supply chain is gradually recovering. Overall, we think we can meet the needs of our customers.
In addition, smart manufacturing also helps us to deal with the crisis. Prior to the epidemic, Ericsson's Nanjing plant completed the digital upgrade and intelligent transformation of the entire plant, for which we invested SEK 500 million. Since more intelligent equipment is used, production efficiency is improved, and production can be resumed in a shorter period of time.
China is a through train: Will the supply chain be considered after the epidemic?
Zhao Juntao: Previously, we thought that the Chinese epidemic was under control, and the world would be just fine. As a result, China is now in control, and the global epidemic has begun to spread again, and it may take longer. This can't be avoided, and I think multinational companies will definitely consider the layout of their global supply chains in the future to make them more flexible and flexible. This epidemic is actually a realistic textbook.
China is a direct train: 5G has played a great role in the response to the epidemic, such as the 5G network construction of Vulcan Mountain Hospital and Thunder God Mountain Hospital. What does Ericsson do in it?
Zhao Juntao: Since the Spring Festival, Ericsson China has organized more than 1,000 on-site and remote support teams to help customers operate and maintain key facilities, such as medical facilities, emergency centers, etc., to provide mobile connectivity and network coverage.
Ericsson's more than 400 employees also worked with three major operators to fight the epidemic in Wuhan and Hubei. For example, in Wuhan, we participated in the construction of two major temporary hospitals-Vulcan Mountain Hospital, Thunder God Mountain Hospital, and China Mobile Together, China Unicom completed the laying of the mobile communication network in a short time.
The spread of the epidemic has less impact on the communications industry
China is a through train: 2020 is a crucial year for commercialization of 5G worldwide. Will the epidemic interrupt the 5G commercialization process?
Zhao Juntao: Whether the epidemic will weaken market demand is of concern to all industries. The aviation industry and the hotel industry have been greatly affected. But the communications industry is lucky.
First of all, from the perspective of China, 5G demand has not only been weakened but also strengthened. 5G is listed as "new infrastructure" by the Chinese government, which is one of the seven fields, which will benefit the entire communications industry. Moreover, we have also seen the role of 5G in the entire epidemic prevention process, and we look forward to 5G's next step to better play its role in stimulating the economy. A few days ago, the media reported that 80% of the 5G projects of the three telecom operators were being implemented as planned and were not affected.
Secondly, from a global perspective, before the epidemic, 5G made rapid progress, our orders continued to increase, and customer demand continued to increase. At present Ericsson has obtained 86 5G commercial contracts and agreements. Will the epidemic change these needs? I personally don't think so. Because the more people do not go out at home, the more they need a communication network.
In China, during the epidemic, everyone worked in the cloud and lived in the cloud. The more people used it, the slower the network became. Therefore, many of our employees have no rest to cope with the tasks of mobile emergency optimization and emergency capacity expansion.
China is a through train: bidding, procurement, and construction stopped during the epidemic. Is the project schedule affected?
Zhao Juntao: The entire timetable may be affected. Due to the epidemic in the first quarter, some projects may be delayed. In addition to production, another important reason is logistics. Logistics was also a big problem last month, and suppliers were unable to deliver to us normally. The same is true abroad. However, in general, mobile communications may be a relatively small-impacted industry, and it will grow significantly. According to the current situation, the restart of the entire global 5G market may not take place until June or August.
China takes the lead in large-scale coverage of 5G independent networking
China is a direct train: The Ministry of Industry and Information Technology issued a notice to promote the development of 5G, clarifying that this year a large-scale investment in independent network construction of SA network, no longer invest in non-independent network NSA, is the equipment industry ready?
Zhao Juntao: In June this year, 3GPP will officially release the SA standard. But the standard has been frozen before, and the industry has been developing in accordance with this standard.
The challenge is that, with the needs of China's independent networking, the entire industry and ecological chain are moving forward. Considering the scale of the Chinese network, the ecosystem needed for independent networking, not only system manufacturers, but also terminals, chips, test instruments, etc., requires all links to mature as soon as possible, which will be a great challenge. At present, base stations and systems are more mature, and terminals, especially diversification, are slower.
China has many unique characteristics to build a 5G SA network. China Mobile's frequency bands are 2.6G and 3.5G, and it requires a bandwidth of 160 megabytes. China Unicom and China Telecom jointly built and shared, and each of them put out 100 megahertz in the 3.5G frequency band and became 200 megahertz. From the perspective of system testing, these are all unique in the world and are a challenge for system suppliers.
China is the first 5G independent network with national coverage. There is no successful experience abroad, so the challenge is very great.
China is a through train: Now many mobile phone manufacturers have released 5G mobile phones, but the price is not very cheap. When is the price expected to come down?
Zhao Juntao: The challenges on the chip and terminal side are even greater. Early versions of the terminal, including the power consumption of the chip, were relatively high and would affect the consumer experience. The terminal manufacturer must continue to update its software. The version of the terminal needs to be constantly updated, which may be more frequent than our system side, and everyone should do the interconnection and interoperability test before formal commercial use, and pass relevant certifications. If there is no perfect interconnection, it will affect the performance of the entire network and the consumer experience.
China is a through train: When do you expect commercial SA to be available this year?
Zhao Juntao: It will be launched at the end of the third quarter. From a practical point of view, I estimate that the scale should be more realistic in the fourth quarter. The outbreak may affect the efficiency of the next two quarters. This year, China will achieve the coverage of cities above the prefecture level. This is a very large-scale coverage. (Author: Liu Yuying)