In August, Nokia announced plans to close its R&D center in Hangzhou, involving the layoff of approximately 1,600 employees. This marks a new phase in Nokia's strategic contraction in China, moving from the layoff of 2,000 employees two years ago to the complete shutdown of the R&D center today.

According to Light Reading, Nokia management has informed employees of the Hangzhou R&D center closure plan through internal emails, and affected staff have begun internal consultations. This round of layoffs, affecting 1,600 people, represents Nokia's largest personnel adjustment in China in the past two years. More notably, as part of the latest restructuring plan, Nokia's other offices in Beijing, Chengdu, Qingdao, and Shanghai also face potential closure.

China's Market Share Nears Zero

The core of Nokia's predicament in China lies in its failure to secure major contracts during the 5G era. As the world's largest 5G network construction market, China's state-owned telecom operators have largely sidelined Nokia in their large-scale equipment procurement.

Data shows that Nokia's revenue in Greater China has plummeted from nearly €2.2 billion in 2018 to just €913 million in 2025. CEO Justin Hotard has publicly stated that Nokia's market share in China has fallen below 3%, and the company has been excluded from the market on national security grounds.

Ongoing Strategic Contraction

The closure of the Hangzhou R&D center is not an isolated incident, but the latest link in Nokia's ongoing contraction in China. Data shows that Nokia's employee count in Greater China has dropped sharply from 13,700 in 2020 to 7,200 in 2025. Globally, Nokia's total workforce has also undergone significant reduction. From a peak of approximately 103,000 following the 2018 acquisition of Alcatel-Lucent, the number has fallen to about 78,000 currently, and is expected to further decrease to approximately 70,000 by the end of 2026.

Restructuring Intensified

To address the challenges, Nokia has substantially raised its restructuring cost forecast for the current fiscal year from €250 million to €800 million, with €350 million specifically allocated to restructuring its China operations.

At the end of 2025, Nokia completed the acquisition of the 50% stake in NSB held by Huaxin Group, achieving full ownership. The company plans to achieve approximately €200 million in cost savings by integrating its China operations into its global operations. These moves indicate that Nokia is fundamentally restructuring its presence in China—shifting from an independently operated localization model to a light-asset model under unified global management.

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