Ericsson announced that they will launch a project named Project Transform in mainland China that targets the company's regional functions in northeastern Asia.
The major goal of Project Transform is to seek opportunities to reduce costs without implementing layoffs. However, cutting outside labor and reducing the number of employees will reportedly be the second and third choices of this project.
An unnamed executive from Ericsson said in an internal email published widely in local Chinese media that they have to admit that their regional profit capability is unacceptable and their biggest challenge is still mainland China. Over the past few quarters, Ericsson has been promoting profit improvement measures in the entire region, but these measures cannot handle the troublesome market situation in mainland China. Both the mobile enterprise and consumer markets in China have become more fragmented and deliver lower returns.
The executive said their position in mainland China is facing serious threats due to their poor competitiveness in this marketplace. To ensure the continuity of their profit recovery strategy, they need to enhance cost controls and improve organizational efficiency. They expect that Project Transform will help improve Ericsson's competitiveness in mainland China, allowing them to response to the demands of customers faster and gain rapid development in new growing areas.
Project Transform reportedly has seven focuses, including its overall Chinese mainland organizational structure, business entity focus, customer unit, service operation, common business cores, business support, and outside procurement and cooperation.