Huawei, ZTE Secure Vietnam 5G Contracts Amid Warming China Ties

China's leading telecommunications firms, Huawei and ZTE, have secured a series of contracts to supply 5G equipment in Vietnam. This development signals a strengthening of Hanoi's bonds with Beijing and has prompted concern among Western officials.

Credit: HUAWEI

Vietnam previously showed reluctance to use Chinese technology in crucial infrastructure. However, relations with China have warmed, contrasting with a deterioration of ties with Washington due to tariffs on Vietnamese goods.

Sweden's Ericsson and Finland's Nokia secured contracts for Vietnam's 5G core infrastructure, with U.S. chipmaker Qualcomm supplying network equipment. Despite these, Chinese companies have started winning smaller tenders with state-owned operators.

A consortium involving Huawei was awarded a USD 23 million contract for 5G equipment in April. This occurred weeks after the U.S. government announced tariffs on Vietnamese goods.

Credit: ZTE

ZTE has secured at least two contracts for 5G antennas, totalling more than USD 20 million. The first publicly disclosed deal came in September, a month after U.S. tariffs took effect.

Washington has long considered the exclusion of Chinese contractors from Vietnam's digital infrastructure, including undersea fibre-optic cables, a key condition for providing support in advanced technologies. Huawei and ZTE are prohibited from U.S. telecommunications networks due to national security risks. Sweden and other European nations maintain similar restrictions.

Ericsson declined to comment on Chinese companies, but stated it was "fully committed to support its customers in Vietnam." Sweden's foreign ministry stated that access to secure, trusted networks is crucial for all countries, especially as more critical societal functions become digital.

Vietnam, an unaligned Southeast Asian nation, is a significant area in the competition for global influence. Its proximity to China has established it as a major industrial hub for multinational corporations like Apple, Samsung, and Nike, which depend on Chinese components and Western consumers.

Nguyen Hung, a specialist in supply chains at RMIT University Vietnam, said Vietnam previously adopted a wait-and-see approach to Chinese technology under Western pressure. Hung noted Vietnam has its own priorities, suggesting the new deals could lead to deeper economic integration with China.

Hanoi and Beijing have also advanced on other sensitive projects, including cross-border rail links and special economic zones near the Chinese border. Vietnam had previously rejected these projects as security risks.

Huawei lost several bids for 5G equipment in Vietnam. However, the company has cooperated on technical services and signed an agreement in June for 5G technology transfers with Viettel, Vietnam's army-owned main telecommunications operator. Viettel did not respond to a request for comment, but one person at the company said Chinese technology was cheaper.

Western officials have discussed the Chinese contracts in at least two meetings in Hanoi. During one meeting, a U.S. official warned that these contracts could undermine trust in Vietnam’s networks and jeopardise access to U.S. advanced technology.

Officials explored whether areas employing Chinese technology could be isolated from the broader network to prevent data leaks. Innocenzo Genna, a telecommunications lawyer, stated that suppliers of antennas and equipment could still access network data. Genna noted Western contractors might encounter the challenging situation of collaborating with firms they distrust.

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• Huawei and ZTE have secured 5G equipment contracts in Vietnam.

• These deals signal strengthening ties between Vietnam and China.

• Western officials have raised concerns about the Chinese contracts, citing national security risks.

Source: REUTERS