How 5G is changing the geopolitics between China and Southeast Asia

How 5G is changing the geopolitics between China and Southeast Asia

As Beijing strengthens its telecom champions and European operators retreat, Southeast Asian tigers try to break free from the Dragon's influence

5G project presentation (Getty Images) They call it the technological cold war . It is one of the few sectors in which one can really risk at least partial decoupling, the notorious decoupling of global economies. And indeed, just as Chinese technology is increasingly in the crosshairs of the United States and its partners, foreign technology finds less and less space in the China of "double circulation" and the search for digital (and non-digital) self-sufficiency. Within the tech contest, the development of 5G network infrastructures certainly occupies a central position.

What happens in China

The counter-offensive launched by Washington on Beijing's players has long produced some effect in Europe (and beyond), including Italy. It really seems like a geological era has passed since the private meeting between then Prime Minister Giuseppe Conte and Huawei founder Ren Zhengfei in April 2019 in Beijing, on the sidelines of the second forum on the Belt and Road (to which the yellow-green government had just officially joined).

The Chinese giants continue to be strongly supported by the state, which among other things has avoided targeting them in the current crackdown on the digital and private sector. In July, Huawei and Zte jointly won 90 percent of 5G base station supply contracts for China Mobile and China Broadcasting Network. In particular, Huawei has secured around 60% of the contracts despite the price of its equipment being higher than those of local and foreign rivals.

The contracts won by the Shenzhen-based company could bring in revenues of up to 6 billion dollars. It will build more than half of the 480,397 5G base stations planned for the tender. The new base stations for China Mobile and China Broadcasting Network are the result of an agreement reached last January to jointly build the 700MHz network, which operates on a frequency band also considered ideal for rural areas, on whose development the government is focusing. very very much. The response of the other two national players, China Telecom and China Unicorn, should soon arrive.

Less space for foreign companies

But in the development of Chinese networks there is less and less space for foreign actors. Sweden's Ericsson and Finnish Nokia's local joint venture Shanghai Bell won just 10% of July contracts. But, more generally, their operations in the area are constantly decreasing. Ericsson, which was once a major supplier of telecommunications equipment in China, saw revenues in the Chinese market drop by 60% in the second quarter compared to the same period in 2020. In recent days, the company also announced that it will close. its main research center in Nanjing by November. The plant was opened in 2001 and represents one of the flagships of Ericsson's presence in the People's Republic, which also has four other centers still operating in Beijing, Shanghai, Guangzhou and Chengdu with a total of over five thousand employees. The 630 redundancies of the Nanjing center could end, according to the South China Morning Post, to the Finnish company TietoEvry.

The closure of the research center represents a first sign of the raising of the white flag by the company Swedish, which for a long time had tried to persuade the Stockholm government not to ban Huawei from the race to develop the Scandinavian country's network infrastructure. But diplomatic relations between Sweden and China are at a minimum and this inevitably also affects Ericsson's operations on the Chinese market. However, giving up its presence on that market is certainly not easy, given that as regards 5G it is the largest in the world with about 1 million operating stations already by mid-2021. In 2020, revenues in China accounted for 10% of the total revenue of the company. In an interview with Reuters, Ericsson chairman Borje Ekholm assured that the company will not leave the Chinese market "easily", claiming a 120-year presence in the country. Scandinavian competitor Nokia could take advantage at least in part of Ericsson's difficulties, and the contract won in July is the Finnish company's first in Chinese 5G.

The frontier of Southeast Asia

Geopolitical tensions and cross pressures are not only affecting the Chinese market, but also the rest of Asia. It is no coincidence that unprecedented spaces are being created for regional players in Southeast Asia, which until recently was considered a land of conquest for Chinese players. No country in the area has officially banned Chinese producers, although in some cases it is a de facto stop, as in Vietnam. At the same time, space appears to be shrinking.

After the famous development of Forest City, the first smart city within the Iskandar Special Economic Zone, Malaysia has recently decided to diversify its 5G network . In July, Ericsson was chosen over Huawei for a $ 2.6 billion contract for the development of national network infrastructures. In Singapore, the construction of the network was instead entrusted to a partnership between the local Singtel, Ericsson and Nokia. The city-state is investing heavily in artificial intelligence and the digital sector, aiming to achieve 100% 5G coverage by 2025.

Singtel itself could take advantage of tensions on Chinese equipment to expand its role regionally . The company is the leading telecommunications operator in Southeast Asia and has set itself the goal of expanding to neighboring countries, in particular Thailand, the Philippines and Indonesia. It has acquired stakes in several regional operators such as Thailand’s Advanced Info Service, Philippine Globe Telecom and Indonesian Telkomsel. The goal is to prepare a regional approach to a rapidly developing sector in which suddenly new spaces seem to be created.

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5G China Huawei Telecommunications Telephony Policy globalData.fldTopic = "5G, China, Huawei, Politics, Telecommunications, Telephony"

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