By Francesco Guarascio
HANOI (Reuters) -China’s leading telecommunication firms Huawei and ZTE have won a string of contracts this year to supply 5G equipment in Vietnam, in another sign of Hanoi’s strengthening bonds with Beijing, stirring concern 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 tech companies as sometimes frosty relations with its northern neighbour have warmed while ties with Washington have soured over tariffs on Vietnamese goods.
While Sweden’s Ericsson and Finland’s Nokia secured contracts for Vietnam’s 5G core infrastructure, with U.S. chipmaker Qualcomm providing network equipment, Chinese companies have begun winning smaller tenders with state-owned 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 has won at least two contracts, one last week, totalling more than $20 million for 5G antennas. The first publicly disclosed deal came in September, a month after U.S. tariffs took effect.
Reuters could not establish whether the timing of these wins was linked to U.S. tariffs, but the deals raised concerns among Western officials.
The exclusion of Chinese contractors from Vietnam’s digital infrastructure, including undersea fibre-optic cables, has long been identified by Washington as a key condition for support in advanced technologies.
Huawei and ZTE are banned from U.S. telecom networks as an “unacceptable risk” to national security. Sweden and other European countries have similar restrictions.
Ericsson declined to comment on Chinese companies, but said it was “fully committed to support its customers in Vietnam.”
Huawei, ZTE, Nokia, Qualcomm, the U.S. embassy in Vietnam, China’s embassy, Sweden’s foreign ministry or Vietnam’s tech ministry responded to requests for comment.
VIETNAM-CHINA TIES WARM
The unaligned Southeast Asian nation is a crucial battleground in the competition for global influence. Its proximity to China has made it a major industrial hub for multinationals such as Apple, Samsung and Nike, which rely on Chinese components and Western consumers.
Under Western pressure, Vietnam long took “a wait-and-see approach” to Chinese technology, said Nguyen Hung, a specialist in supply chains at RMIT University Vietnam. But “Vietnam has its own priorities,” he added, noting the new deals 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 close to the Chinese border, which Vietnam had previously discarded as security risks.
Huawei lost multiple bids this year on 5G equipment in Vietnam, according to tender data. But it has cooperated on technical services, and signed an agreement in June on 5G technology transfers with Viettel, Vietnam’s army-owned main telecom operator, according to Vietnam’s defence ministry.
Viettel did not respond to a request for comment. One person at the company said 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 U.S. official warned they could undermine trust in Vietnam’s networks and jeopardise access to U.S. advanced 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 could still gain access to network data, said Innocenzo Genna, a telecommunications lawyer, noting “Western contractors may face the awkward prospect of working alongside firms they do not trust.”
(Reporting by Francesco Guarascio; Additional reporting by Phuong Nguyen and Khanh Vu in Hanoi, Che Pan in Beijing; Editing by Kate Mayberry)
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