EU Official: Chinese 5G Contracts Could Hurt Vietnam’s Foreign Investment

A top European Union official warned that Vietnam's recent decisions to award 5G network contracts to Chinese companies Huawei and ZTE could discourage foreign businesses from investing in the country. The warning comes as Vietnam shifts away from its previous cautious approach toward Chinese technology partnerships.

A senior European Union official cautioned Tuesday that Vietnam’s decision to partner with Chinese technology companies for its 5G infrastructure could discourage international businesses from investing in the Southeast Asian country.

While European telecommunications giants Ericsson and Nokia are building Vietnam’s primary 5G network framework, Vietnamese government-owned operators have recently signed contracts with Chinese competitors Huawei and ZTE for additional 5G services.

This represents a significant departure from Vietnam’s historically cautious stance regarding Chinese partnerships, raising alarm among Western government representatives.

EU Commissioner for International Partnerships Jozef Sikela urged caution during an EU-Vietnam investment conference in Hanoi. “Be careful with dependencies in strategic areas,” Sikela advised when questioned about the Chinese telecommunications deals.

Speaking to Reuters at the investment forum, Sikela emphasized the strategic importance of network security. “5G is the new battlefield,” he explained. “Through the network you can access a lot and you can control a lot, and you have to be always careful who is your trusted vendor.”

The EU official warned that security concerns could impact future business relationships. “If investors have doubts about the security of their data, they might decide not to take the risk and not to invest,” he stated.

Neither Vietnam’s foreign ministry nor the Chinese embassy in Hanoi provided immediate responses to requests for comment.

Vietnam serves as a crucial manufacturing center, hosting significant production facilities for major Western corporations, including European companies Adidas and Lego. The nation’s sustained economic growth over several decades relies heavily on international investment.

On Tuesday, the European Union and European nations unveiled a fresh investment package targeting Vietnam’s transportation and energy infrastructure.

Sikela acknowledged that potential investment risks from insecure networks remain hypothetical at this point, noting that various European nations previously permitted Chinese telecommunications vendors to operate within their borders.

Both Huawei and ZTE face prohibitions from telecommunications infrastructure in multiple European countries and the United States due to national security concerns.

The Chinese companies have denounced these limitations as unjust, dismissing security worries as without merit.

Vietnamese government representatives have defended Chinese telecommunications equipment as dependable and cost-effective while minimizing security concerns. Reuters previously reported that additional agreements with Chinese companies are currently being considered.