Exclusive-Huawei, ZTE seal 5G deals in Vietnam after US tariffs, as ties with China warm

By Francesco Guarascio

HANOI (Reuters) – China’s top telecoms firms Huawei and ZTE have won a series of contracts this year to supply 5G equipment in Vietnam, in another sign of Hanoi’s strengthening ties with Beijing, which has raised concerns among Western officials, seven people with direct knowledge of the situation told Reuters.

For years, Vietnam was seen as reluctant to use Chinese technology in sensitive infrastructure, but in recent months it has embraced Chinese technology companies as sometimes frosty relations with its northern neighbor warmed while ties with Washington soured over tariffs on Vietnamese goods.

While Sweden’s Ericsson and Finland’s Nokia won contracts for Vietnam’s core 5G infrastructure, with US chipmaker Qualcomm providing network equipment, Chinese companies have begun winning smaller tenders with state operators, so far unreported public procurement data shows.

A consortium including Huawei was awarded a $23 million contract for 5G equipment in April, weeks after the White House announced tariffs on Vietnamese goods. ZTE won at least two contracts, one last week, totaling more than $20 million for 5G antennas. The first publicly disclosed agreement came in September, a month after the US tariffs took effect.

Reuters could not establish whether the timing of these wins was linked to the US tariffs, but the agreements raised concerns among Western officials.

Excluding Chinese contractors from Vietnam’s digital infrastructure, including undersea fiber optic cables, has long been identified by Washington as a key condition for support in advanced technologies.

Huawei and ZTE are banned from US telecommunications networks as an “unacceptable risk” to national security. Sweden and other European countries have similar restrictions.

Ericsson declined to comment on the Chinese companies, but said it was “fully committed to supporting its customers in Vietnam.”

Huawei, ZTE, Nokia, Qualcomm, the US embassy in Vietnam, the Chinese embassy, ​​Sweden’s foreign ministry or Vietnam’s technology ministry responded to requests for comment.

VIETNAM-CHINA HOT FRIENDS

The non-aligned Southeast Asian nation is a crucial battleground in the competition for global influence.​​ Its proximity to China has made it a key industrial hub for multinationals such as Apple, Samsung and Nike, which rely on Chinese components and Western consumers.

Under pressure from the West, Vietnam has long taken a “wait and see approach” to Chinese technology, said Nguyen Hung, a supply chain specialist at RMIT University Vietnam. But “Vietnam has its own priorities”, he added, noting that the new agreements could spur deeper economic integration with China.

Hanoi and Beijing have made progress recently on other sensitive projects, including cross-border rail links and special economic zones near the Chinese border, which Vietnam had previously dismissed as security risks.

Huawei has lost multiple bids this year on 5G equipment in Vietnam, according to bidding data. But it has cooperated on technical services, signing an agreement in June on 5G technology transfers with Viettel, the main telecommunications operator of Vietnam’s army, according to Vietnam’s defense ministry.

Viettel did not respond to a request for comment. One person at the company said the Chinese technology was cheaper. The sources declined to be named because the information they shared was not public.

WESTERN CONCERNS

The Chinese contracts have been discussed in at least two meetings of senior Western officials in Hanoi in recent weeks, diplomatic sources said. In one meeting, a US official warned that they could undermine confidence in Vietnam’s networks and jeopardize access to advanced US technology.

In a meeting this month, officials explored whether areas using Chinese technology could be sealed off from the rest of the network to prevent data leaks, one of the sources said.

But suppliers of antennas and equipment can still gain access to network data, said Innocenzo Genna, a telecommunications lawyer, noting “Western contractors may face the uncomfortable prospect of working alongside untrusted firms.”

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(Reporting by Francesco Guarascio; Additional reporting by Phuong ‌Nguyen and Khanh Vu in Hanoi, Che Pan in Beijing; Editing by Kate Mayberry)