Japan is the latest country to prohibit Chinese vendors in 5G networks

Huawei and ZTE have been dealt another blow ahead of the 5G bonanza as Japan’s four operators join the government in snubbing Chinese communications equipment.

According to Nikkei Asia Review, the Japan’s telcos have followed the lead of the government by omitting Chinese technology from any future network plans. With Japan set to be one of the leading lights in the 5G era, this is one of the most significant dents in the Huawei and ZTE egos to date.

Softbank, NTT Docomo and KDDI have all said they will not use Chinese equipment in their 5G networks, while Rakuten (which will become the fourth operator upon launch next year) has also joined the snub.

Yesterday (Monday 10), the Japanese government officially confirmed rumours that it would effectively be banning any public-sector body or organization from purchasing personal computers, servers and telecommunications equipment from Chinese companies. While the guidelines have not named any company specifically, it does add to the growing momentum building against Huawei and ZTE around the world. The official line from the government is the precautions have been put in place to prevent the leak of sensitive information.

As is the case most of the time, the telcos generally follow the lead of the national government. This is not necessarily because they agree with the party line, but more to ensure there are no compliance issues in the future when bidding for government work. If the government has banned Chinese components in their own networks for security reasons, it might not look favourable on potential vendors who have the kit in theirs.

For Huawei, this could be seen as a massive loss. Over the last 12-18 months, the firm has been buddying up to Softbank, Japan’s main telco, through a number of 5G trials and joint research projects. The stage had been set for a major customer win, following from a profitable relationship in the 4G era, though this seems to be the end of the Japanese road.

Looking at the international market for Huawei and ZTE, prospects are starting to look thinner every week. The US was the first to ban the pair, though this is not necessarily new, but with Australia and New Zealand joining the US momentum gathered. South Korean telcos all omitted both Huawei and ZTE from preferred supplier lists, while the UK is also turning as well. Last week, EE said it was stripping all Huawei kit out of its network, and none of the four MNOs will be using any Chinese kit in the core network for 5G.

An analogy we have used before is a line of dominos. ‘Western’ governments all tend to follow suit when it comes to regulation and legislation, so it would not be a surprise to see the trends gather momentum. Last week also saw European Commissioner for Digital Single Market Andrus Ansip publicly denounce China on the whole, suggesting the bloc might be jumping on the very same banned-wagon. This of course might be nothing more than posturing, but the signs are ominous.