Hanoi, for years reticent about Chinese critical infrastructure, is taking a sharp turn. The decision by Vietnam’s state-owned operators to award 5G network construction contracts to Huawei and ZTE is causing a stir in Brussels and Washington. While Vietnam’s motivations are pragmatic – Chinese equipment is cheaper and proven in the region – the price of this saving may prove high in the currency that is most valuable to Hanoi: foreign direct investment.
During the EU-Vietnam Investment Forum, EU Commissioner for International Partnerships Jozef Sikela sounded a clear warning. 5G today is not just about faster internet, but a fundamental layer of industrial security. For global players such as Adidas and Lego, who have located their key production centres in Vietnam, data integrity is a prerequisite for further scaling of operations. If Western managers become suspicious that their trade secrets are being sent over the infrastructure of a provider considered risky in Europe and the US, they may withhold further tranches of capital.
This situation puts Vietnam in a difficult geopolitical position. The country has been a beneficiary of the China Plus One strategy, attracting companies fleeing the Middle Kingdom. But now, by integrating Chinese technology into the heart of its digital economy, Hanoi risks losing its ‘safe haven’ status. Local authorities downplay the risks, pointing to the reliability of Huawei’s technology, but for Brussels, 5G is a ‘new battleground’ where trust in the supplier is more important than technical specifications.
Paradoxically, European giants Ericsson and Nokia continue to build the core of Vietnam’s network, but the admission of Chinese rivals on a wider scale is changing the market dynamics. The European Union, despite criticism, is not withdrawing from Vietnam, announcing new investment packages in the transport and energy sectors. Nevertheless, the message coming from Europe is clear: network security is the foundation of modern business.
For policymakers in Hanoi, the coming months will be a balancing test. They must decide whether the short-term benefits of cheaper infrastructure outweigh the risk of a long-term outflow of Western capital that has driven Vietnam’s economic miracle for decades. In a world where technology is inextricably linked to politics, choosing a 5G provider becomes one of the most important business decisions of the decade.
