Huawei and ZTE are amongst the major telecom gear manufacturers and suppliers globally. Both the companies have played a pivotal role in helping operators across the world launch mobile networks. Be it 2G, 3G, 4G, or 5G, both Huawei and ZTE have been involved in the telecom market for a long time.
However, the recent developments and negative branding of the companies might leave them financially paralysed in the coming few years. For starters, countries such as the US and India, which have major telecom markets, are slowly phasing out Chinese vendors from their network ecosystem.
Governments are worried about national security because of the alleged ties of Huawei and ZTE with the Chinese government. The allegations haven’t been proved yet, and both the companies at every point have denied any such connection.
Regardless, once the perception is made, the market reacts. That is what is happening with Huawei and ZTE. The Indian government has already said that telcos can’t purchase gear or equipment from any vendor that is not in the ‘trusted list’ determined by the National Cybersecurity Coordinator (NCSC).
Lowering Reputation of Huawei and ZTE
The premier telco of India, Bharti Airtel, has had some good and long-standing partnerships with Huawei. Sunil Bharti Mittal has been found backing Chinese vendors on multiple occasions, saying they have proven technology at a cheaper cost.
But while the cost might be lesser for the telco, it might become too expensive for the government when it has to face network security threats from China.
Because of the lowering reputation, both Huawei and ZTE stand to lose major business across the globe in the near term. It is not like their business is dead; both the companies have been getting contracts globally, but the trust in them has gone down.
Huawei believes that it still has a fair shot in India. The company said that when the moment arrives, the Indian government will take a calibrated approach on the matter. At the same time, the Indian government has not said anything in support of the Chinese firms.
The companies need to push hard into building a better reputation quickly before new players emerge and eat away their market share. There is still plenty of business that needs to be done in developing nations, and both ZTE and Huawei and equipped with resources to facilitate the needs of such countries.
But it won’t happen if the reputation of the companies keep going down. Huawei and ZTE are still working in India but on their older contracts. Indirectly, the government has asked telcos not to award any contract to the Chinese vendors.