Huawei’s 5G gear seen as a bargain in many European capitals even though Polish arrest lifts security stakes
- Chinese tech giant’s 5G gear seen as cost-effective and reliable in many developing countries who will have to weigh security risks
Huawei Technologies’ competitive 5G advantage in developing markets is likely to remain because of its affordable technology, say analysts, even as suspicion rises following the arrest last week in Poland of a Chinese sales director at the world’s largest telecommunications equipment maker on spying charges.
“Huawei’s prospects in [central and eastern] Europe are still positive following the arrest,” said Kenny Liew, a Singapore-based TMT analyst at Fitch Solutions. “While European governments are becoming increasingly conscious about Huawei’s equipment amid increasing – but as yet unfounded – allegations of espionage, they definitely acknowledge Huawei’s reliability and cost-effectiveness.”
Liew believes that countries closer to China’s orbit in Asia, including central and eastern European nations, and those committed to China’s infrastructure and economic programme the "Belt and Road Initiative", will be reluctant to impose any ban on Chinese equipment as they have to balance relations between the US and China. Huawei’s keenly-priced next generation 5G mobile network equipment will also give it an edge against global competitors in countries with relatively lower levels of GDP.
“Countries will be keen to slash costs [when buying 5G gear] wherever possible, and one way to do so is to opt for cheaper but proven Chinese equipment,” Liew said. “The US may find that they lack the requisite leverage to successfully push for a ban on Chinese equipment in these countries.”
Europe is Huawei’s biggest foreign market. The Shenzhen-based tech giant earned 163.8 billion yuan (US$24.2 billion) from Europe, the Middle East and Africa in 2017, according to its annual report. That accounted for about 27 per cent of its total revenue and more than revenues from the Americas and Asia-Pacific combined.
The arrest of Huawei employee Wang Weijing by Poland last week on spying charges has nevertheless increased the pressure on China’s largest privately-held company, amid broad security concerns raised by the US and other EU countries. Huawei fired Wang on Saturday, saying he had brought it into disrepute and that his arrest was not related to the company.