Chinese telecoms giant Huawei Technologies Co , already under US sanctions, is preparing a retreat from Russia by furloughing some local employees and suspending new contracts with operators, according to a report by Forbes Russia. Huawei has furloughed part of its staff in its Moscow office for a month in April after suspending all orders in the market, according to the report, which was published last week and cited anonymous sources. The company has also cut jobs at the marketing department, but employees from China still came into the office, according to the report. The Shenzhen-based technology firm declined to comment. Huawei bets on new chip packaging tech to ease disruptions caused by US sanctions The move comes as companies still operating in the country scramble to avoid secondary sanctions from the US and Europe following Russia’s invasion of Ukraine on February 24. The US Treasury Department issued a number of new sanctions earlier this month in a move seen as a warning to Chinese firms . In addition to the Forbes report, local newspaper Izvestia reported this month that Huawei has suspended new contracts since the end of March for supplying network equipment to Russian operators. Some of its employees in Moscow have also been told to work remotely, according to the report. Huawei may reassess its product portfolio in Russia and continue to sell equipment made without US technology, the report said, also citing an anonymous source. Guo Ping, a vice-chairman at Huawei, said at the end of March that the company was assessing risks to its operations after the Russian invasion. “We’ve noticed that some countries and regions have issued some policies, and they’re complex and constantly changing. Huawei is still carefully assessing these policies,” Guo said in response to a question about whether Huawei would pull out of Russia to avoid risking additional sanctions. A number of Chinese firms have been caught in the crossfire from sanctions imposed on Russia by Western countries in the wake of its incursion into its eastern neighbour. Under the US export sanctions, any technology goods made in foreign countries using American machinery, software or blueprints are banned from being exported to the country. Beijing’s increasingly close ties with Moscow have precluded the Chinese government from criticising Russia’s actions or calling it an invasion. It has also opposed the widespread sanctions on Russia. As a result, many Chinese firms have held fast to their operations in the country, risking secondary sanctions for violating ones already in place. One list maintained by a team at Yale University that tracks companies’ operations in Russia labels 43 Chinese companies as “digging in”, including Huawei. The list was last updated on April 11. This is in contrast to the hundreds of US and European firms that have suspended operations in Russia or withdrawn from the country, according to the list. Huawei rival Ericsson, the Swedish telecoms equipment maker, said on Monday that it will suspend its Russian business indefinitely and put local employees on paid leave. Ericsson had already halted sales in Russia in February, and its Finnish competitor Nokia followed suit last month. Huawei has not disclosed the scale of its operations in Russia, but it has some existing business ties established as recently as last year. The Chinese conglomerate struck a deal in 2021 with MTS, Russia’s largest mobile operator, to launch commercial 5G services in the country. It has also worked with Rostelecom, a Russian communications operator now sanctioned by the US, on its digitisation efforts, according to previous statements on the Chinese company’s website. Chinese tech firms see warning shot from US sanctions on Singaporean firm Huawei has been a core vendor of major Russian telecoms operators, such as MTS, Megafon and Veon, which have broadly deployed the Chinese tech giant’s 3G and 4G equipment, among other communications technologies, according to Yang Guang, a senior analyst at tech consultancy Strategy Analytics. Yang said Huawei’s reported moves in Russia do not mean the company will exit the market. “I think Huawei will continue a wait-and-see strategy. At least, Huawei will not exit Russia before Ericsson does it,” Yang said, stressing that Ericsson’s latest statement did not indicate that it was completely pulling out of the market. The US government has previously warned that Chinese companies could be sanctioned if they are found to be helping Russian partners skirt sanctions. The Treasury Department’s new sanctions this month were taken as a fresh warning to this effect, especially given that Singapore-based telecoms electronics wholesaler Alexsong Pte Ltd was among the entities hit with secondary sanctions. The Treasury list includes 21 entities and 13 individuals in total, including Joint Stock Company Mikron, Russia’s largest chip maker. Last Friday, the Treasury Department’s Office of Foreign Assets Control (OFAC) exempted telecommunications services from the sanctions against Russia, and authorised business transactions involving “services, software, hardware, or technology incident to the exchange of communications over the internet”. “With the loosening of OFAC sanctions, potentially there could be legal sales in the internet space that even Huawei could conduct without getting into further trouble with the US,” said Douglas Fuller, an associate professor at City University of Hong Kong. Huawei’s lucrative smartphone business was hit hard after the US imposed sanctions on the company in 2019 , restricting its access to technology services from companies like Google. It later increased restrictions that curtailed Huawei’s access to advanced chips, dashing its dream of challenging Samsung and Apple as a global smartphone brand. Huawei’s chief financial officer Meng Wanzhou, a daughter of founder Ren Zhengfei, was put under house arrest in Vancouver for nearly three years while fighting an extradition request by the US Department of Justice. Meng was accused of defrauding banks for not disclosing Huawei’s relationship with a business unit in Iran, which is under US sanctions. Meng returned to China after 1,000 days of detention and was recently added to the rotation to serve as rotating chairwoman in the future.