Woman on a smartphone at a market in Cambodiaimage rights
Getty Images

Chinese telecommunications giant Huawei has a global setback risk. For many telecom operators in Southeast Asia, however, the company remains one of the preferred 5G partners.

Several Asian telecom companies have told me that it is "business as usual" for Huawei in their countries.

That is, even though the US has pressured its allies to hang up on Huawei, out of concern that the company is spying on the Chinese government.

Huawei has consistently denied that it is a security threat and says it will never hurt its customers.

  • Timeline: What's up with Huawei?
  • The Huawei boss is trapped in a gilded cage

The US Department of Justice also accused the company of stealing trade secrets and breaking US sanctions against Iran.

But that did not affect the attractiveness for Asian customers.

Huawei is one of the leading providers of telecommunications equipment for operators of 5G tests in the Philippines, Singapore, Malaysia and Thailand.

Industry insiders say competitors can not compete with Huawei for cost and technological performance.

What is 5G?

High-speed Internet has been described as the spinal cord of a modern economy, and 5G is an important part of it.

If it is fully functional, it is expected to change the way we use the Internet.

Huawei is also a key player for emerging market operators such as Cambodia, where it has been an integral part of the current 4G network.

image rights
Getty Images

Basically, this means that you can download a video in a few seconds. Think of the more sophisticated end, autonomous cars, smart homes and cities with internet access.

A secure and secure 5G network will be crucial for a modern economy in the future, says Tom Uren of the Australian Strategic Policy Institute (ASPI). Therefore, Huawei is subjected to such a test.

"Although no company manufactures completely safe products, Huawei has a unique additional risk that goes beyond the" normal "risk of buying complex devices," he writes in an article published on the ASPI website.

Mr. Uren points out the alleged close links between the Chinese government and local companies and says that Chinese companies have a legal obligation to cooperate, support and provide educational support.

"The equipment of the 5G network is not just a passive infrastructure," he writes.

"It has complete visibility and control over all the connections within the network, it sees who from whom, when, from where calls and controls which route data is stored."

Huawei – cheaper and better?

It is believed that Huawei is one year ahead of its competitors in terms of technological know-how.

Globe Telecoms in the Philippines has been working with Huawei since 2011 to modernize telecommunications infrastructure networks.

Later this year, Globe plans to bring customers online for the first time by using Huawei devices to provide 5G connectivity in residential areas of Manila where there is no Internet.

"5G is an important building block for the competitiveness of the Philippine economy, which is why we are accelerating our efforts to introduce 5G so that we can provide as many Filipinos as possible with access to this technology," said Gil Genio, Chief Technology and Information Officer said in a statement to the BBC.

image rights
Getty Images

For many countries in Asia, it is ultimately not practical to ban Huawei as it does in the US and Australia.

There are few other options. Finding another supplier that can beat the price offered by Huawei is difficult.

Neither telecom operators nor Huawei will announce how much they charge their customers, but it is believed that the Chinese company will grant a discount of 10% to other companies in the market.

  • Huawei convinces in uncomfortable times

Then there is the aftercare service that Huawei offers. Analysts say there has been an effort in the past to build customer support networks in countries that Western companies usually ignore or dismiss as not important enough.

Concerns rise

Although there are many countries in Asia that have dedicated themselves to Huawei, there are still worries.

The Chinese company's international spotlight is prompting some Asian governments to think twice about using the company's products, according to security analysts.

A security firm told me that requests from government customers were heavily drawn, how problematic Huawei's products were, and what steps they could take to mitigate those risks.

"Some have asked us how much they need to worry about whether Huawei is really a liability," said an analyst who interviews governments in Asia on the condition of anonymity.

"Countries are increasingly concerned that Huawei could pose a significant risk due to its links with the Chinese government."

Nevertheless, these concerns have not yet led to a ban in Southeast Asia.

Malaysia says it will investigate Huawei before making a decision. However, several telecom operators are currently using the company to roll out 5G services in the country.

One of the major telecommunications companies in Singapore, M1, has teamed with Huawei to test 5G services in that country.

Singapore's telecoms regulator said operators should "ensure diversity of providers to mitigate the risk of dependency on a single vendor" and in turn not ban Huawei entirely.

What happens next?

The pressure on Huawei from the west is likely to continue.

The US government is reportedly planning to extend the Huawei restriction by an executive order prohibiting the use of all Chinese telecommunications equipment manufacturers in wireless US networks, and is likely to press US allies to follow suit.

But that could be expensive.

"If the US put a ban on Huawei [in wireless networks]"Then that will also cost the US 5G ambitions," says Samm Sacks, China economic colleague in the New America Think Tank.

"That would mean that we could not participate in a mixed network in Europe or Asia, so if we do not participate, that would be a significant disadvantage."

This would mean a world of two Internet – or what analysts call a "digital iron curtain" – dividing the world into parts that do business with Chinese companies like Huawei and those that do not.