Telco Deep Dive 2018: Which way for Huawei?: Page 2 of 2

 

A global battlefield

Furthermore, for some time, the Americans have been trying to stem China's efforts at industrial espionage, most notably with the conviction of Su Bin, a Chinese national based in Canada who was found guilty of helping steal billions of dollars of R&D from companies such as Boeing.

It's likely a coincidence that Meng Wanzhou, daughter of founder Ren, was also arrested in Canada late last year. But what they have in common is that these arrests are part of the larger picture of a battle for influence and share of the global market. This is the second angle from which the recent attacks on Huawei should be seen.

Some believe that if China is able to be self-sufficient with respect to high-tech solutions, then they will no longer need to import them from other countries such as Germany and South Korea. Although many may laud China's attempt to be able to stand on its own, the fact is that quotas for self-sufficiency may violate WTO rules.

Of course, Beijing denies this, but it is interesting to note that the US tariff list against China focused on products included in the MIC2025 plan and eventually in November 2018 forced Beijing to offer a postponement of some aspects to 2035 by giving foreign companies greater access to its economy.

 

Edotco recently signed an MOU with Huawei on 5G technology. Pictured are edotco's group chief regional officer Wan Zainal Adileen (left), MCMC chief officer Mohd Ali Hanafiah (centre) and president of Huawei’s Small Cell Product Line Ritchie Peng (right).

Caught between two giants

Regardless, this battle is far from over. Malaysia and other countries in Southeast Asia must strategise a way of threading the fine line between these two superpowers. In many ways it is a rerun of the Cold War where countries seem to be forced to take a side.

Will the US and China both be courting neutral countries for influence and support? China's Belt and Road Initiative comes to mind, as does the aborted TPPA. The jury is still out on whether the benefits of opting in outweigh those of selling out.

So, what should companies and governments in the region do when it comes to purchasing Huawei equipment? Establishing a 5G network for the country is certainly an important milestone, with a Malaysian rollout expected to happen in 2020/2021.

Companies such as edotco, who recently announced an MOU with Huawei on 5G technology, make the point simply that as long as the Malaysian government doesn't prohibit it, they will still continue to do business with the Chinese company.

Certainly, economics and price points notwithstanding, there is still the feeling that Malaysian companies go where the government leads. In that sense, it is important for Malaysia to establish some sort of clear policy at the political level of how we intend to interact with China and the US.

Alternatively, we could turn away from the fray towards Europe, to the likes of Nokia and Ericsson. This may be the opportunity for good deals to be made while the attention of giants are elsewhere. Indeed a telco executive from one of these Scandinavian players tells DNA that they have attack plans in place in markets where Huawei may be vulnerable to governments making decisions against them. “We can move in quickly and offer to swap their equipment out for ours,” says the executive who declined to be quoted.

It is unlikely this issue will be resolved soon, given that US President Donald Trump is ratcheting up the tension further when after suggesting that ZTE may also be put on the blacklist.

Whatever the decision, telco companies must just accept that the New Year is heralded with uncertainty, and that China’s success at producing reliable, affordable equipment may ironically be the catalyst for its own downfall.

 
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