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CNBC Transcript: Leif Johansson, Chairman, Ericsson

Following is the transcript of a CNBC interview with Leif Johansson, Chairman of Ericsson. The interview was broadcast on CNBC on 21 March 2017.

All references must be sourced to a "CNBC Interview".

Interviewed by Eunice Yoon, Beijing Bureau Chief, CNBC, at China Development Forum 2017.

Eunice Yoon: China has very ambitious plans to upgrade its technology and manufacturing. What does that mean for Europe?

Leif Johansson: I think it is really good news for Europe and I think in general that the world is doing well by us investing, all of us investing more in technology, communication technology in my case, but also sustainable technology, environmental technology. Upgrades of technology typically bring with it a better environment for many of the people that are involved. So I think China leading on, wanting to be on board of that is very good.

EY: At the same time, we know that there are some jitters in Germany for example or in the United States about China becoming a leader in technology, acquiring technology. Are those fears justified?

LJ: No I'm not, I'm not concerned. I frankly think you see that much more as a normal development. China has come into the world economy and I would say again if you look at it with historic eyes we have been engaging a lot in China as companies and as countries. China is now engaging in the outside of China which I think is a very natural development. It needs to be done in a peaceful respectful way. But that's always true.

EY: What opportunities do you see for Ericsson in China?

LJ: We clearly have a situation where China is becoming very sophisticated in communication technology. There is an assessment here that China will be building some of the most modern infrastructural critical networks. And obviously we are very much part of that.

EY: In what way?

LJ: In the sense that we are delivering very highly sophisticated, very high speeds, low latency etc., networks all over the world, and we feel that we together with all the people that we have 11,000 people in China we can do that in China also.

EY: As you said China's growing really fast and we know that China wants to push through economic reforms. At the same time, a lot of foreign companies especially European ones have been complaining about the lack of market access. What are you seeing in your business in your industry?

LJ: It is an issue. It's obvious that if China is to be part of the overall global economy and be able to take its rightful part in the world economy then market access and the level playing field, just as we have defined in WTO rules, are important for China to come into the world in the right way.

EY: What do you think governments in Europe or in the United States should be doing to try to even out that playing field?

LJ: Well I think right now you can say it's very important that we hold on to what we have gained over the last couple of decades, which is a much freer world trade regime, where basically all countries have benefited a lot. China has to be developed very well under that regime. So I think it's very, right now, very important that we hold on to multilateral trade agreements in the best sense of that word.

EY: I want to ask you a little bit about your company more specifically. Ericsson has had a pretty rough 2016… falling profits, a change in management. What do you think the new CEO will do differently to ensure stability of the company and improve profits? 

LJ: Well I think obviously 2016 was a fairly unique year. We had the whole of the CapEx in all of our countries where we are operating coming down and then we are somewhat in an expectation mode for 5G coming in next couple of years. I think the real number one issue with Mr. Ekholm, the new CEO, is going to make sure we get 5G well, get well-positioned and that we can roll out 5G and the earlier the better.

EY: Well 5G seems like a longer term plan. So is there anything that could be happening closer to this time that would help drive growth new areas or anything like that?

LJ: I think the growth will be coming from where we really are very strong at which is networks. And then we have a big service arm and then individually there are different countries that do different… differently well. But obviously the big thing is really IOT. How will we be able to connect not only people but actually things and billions of things onto the networks? Now that requires a lot of technology and it requires a lot of services provided from us to operators to be able to do that well. When operators are successful in being able to get a higher value of their delivery, then we too can be successful.

EY: What kind of role do you think Ericsson will have in cloud computing?

LJ: I think cloud computing is frankly becoming computing. That's the way things are. The way we used to do computing with local service and small computers etc., is gone. And especially when we come into 5G we have an enormous opportunity to be able to put everything in the cloud, which is where I think it should be. And that also gives the opportunity for many, for example, small or medium-sized companies to really be able to get the resources of what used to be for only large companies before. So I think there is a giant ability to transform a company and businesses in general enterprise in general into much, much more efficient structures by clarification.

EY: You have a strategic partnership with Cisco. What kind of relationship do you want to have with that American company?

LJ: Well we have a good relationship with Cisco right now. Fairly limited and I think from that point of view, we are satisfied with what we see. And obviously as we develop as partners we are going to assess how what we can do more together.

EY: Because of the fact that you guys have a relationship that's been fueling some speculation that there might be an acquisition or a merger of sorts between the two of you. Can you rule that out altogether?

LJ: No, I can only tell you that I have never been involved in any such discussions. Therefore, a hypothetical issue to comment on.

EY: Would you want to have those discussions?

LJ: No.

EY: OK thank you very much.