Is it the end of the road for Huawei’s ASEAN journey?

Huawei logoPhoto:VistaCraft

China’s Huawei offers technical solutions for emerging ASEAN nations. But it comes with unique risks.

By Joelyn Chan

Founded in 1987, Huawei has offices in more than 170 countries. It serves over three billion people globally and raked in a reported US$105 billion in revenue for 2018.

The company epitomises China’s aspirations to be a global tech leader. It has the support of the Chinese government, and it is a central part of the “Made in China: 2025” plan.

The telecommunication giant claims to be the first firm to develop large-scale 5G commercial deployment capabilities.

Source: Huawei annual report

The US and China risk falling into Thucydides’ Trap

Thucydides, the ancient historian, once wrote: “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.” The competition between the two great ancient cities on a collision course for war.

Another Thucydides trap is playing out today between the US and China. President Donald Trump blacklisted Huawei over security risks. Trump accused the company of engaging “in activities that are contrary to US national security or foreign policy interest”.

Huawei’s chief financial officer Meng Wanzhou is currently fighting an extradition request from the US over an alleged breach of sanctions. She is also the daughter of Huawei’s CEO Ren Zhengfei. Huawei has lots to do before it can clear up its reputation and win the trust of President Trump.

The US government’s concerns are centred on the threat of espionage. Using equipment from Chinese suppliers could leave the nation’s internet and telecommunications infrastructure vulnerable to Chinese attack.

Huawei has links with the China government. Ren Zhengfei is a member of the Chinese Communist Party (CCP). Given the close governmental ties, it is unlikely Huawei would be able to reject data requests from China’s government.

Huawei’s rise is also seen as a threat to US dominance. The powerful homegrown brand boosts China’s soft power. When smaller nations need help, the US is not the only global power that they can look to.

Excluding Huawei from ASEAN may not be aligned with local interests

With Huawei’s communication solutions, the Thai and Indonesian governments have managed to improve rural networks. If ASEAN nations are forced to turn their back on Huawei, they could miss out on low cost or innovative offerings.

For now, Singapore has allowed corporations to decide for themselves whether or not to work with Huawei. In May 2019, the nation’s Infocomm Media Development Authority (IMDA) said that technology from Huawei will not be prohibited from the nation’s 5G network. Singaporean telco M1 Ltd will also continue to use Huawei products as long as it makes commercial sense. 

Myanmar and Malaysia see a bright future with Huawei

Huawei holds a 28% market share in Myanmar’s domestic smartphone market. With over 53 million devices sold in the first quarter of 2019, Huawei has solidified its position as the nation’s second-largest mobile phone provider.

Myanmar has made its stance clear. Huawei played a central role in developing Myanmar’s telecom industry. It sees Huawei as a strategic partner and will continue to collaborate with the technology giant.

Malaysian Prime Minister Mahathir Mohamad also expressed a willingness to work with Huawei. He said: “We have to accept that the US cannot forever be the supreme nation in the world that can have the best technology in the world,” adding, “we try to make use of their [Huawei’s] technology as much as possible.”

Though his statement could be interpreted as a dig at the US, there is truth in it. Without Huawei’s technology, large ASEAN nations like Indonesia will struggle to enhance network coverage in underserved rural areas.

As Huawei’s technology embeds itself in the regional infrastructure, ASEAN nations will grit their teeth and bear the possible risks.

In using Huawei’s equipment for their 5G networks, ASEAN countries may be handing the Chinese government a backdoor to its data. 5G data holds a vast amount of critical private information. However, shouldering the security risks will be worth the vast economic opportunities afforded by a fast 5G network. 

The US could see any decision to continue using Huawei’s equipment as an economic betrayal. If the Trump Administration is sufficiently irked, it could include ASEAN nations on future tariff increases. But, developing ASEAN countries crave the opportunities that enhanced coverage brings. As the US and China continue to collide on the global economic stage, Huawei’s saga could be the beginning of many more difficult decisions.

About the Author

Joelyn Chan
Joelyn is a freelance writer based in Singapore. She graduated from Nanyang Technological University with a Double Bachelor in Accountancy and Business. During her free time, she explores the latest developments in fintech and business.