USA and China fighting 'enterprise tech trade war' in Middle East and Africa, analysts warn

The growing tensions between China and the USA have not yet erupted into actual physical conflict.

But analysts have warned that there are "signposts of a struggle" in the Middle East and Africa (MEA) region as the two superpowers fight for dominance of the enterprise tech market.

The region "is emerging as a battleground for international tech supremacy in all areas related to enterprise technology" including cloud, radio access networks for enterprise 5G, and artificial intelligence (AI), the London-based data and analytics firm GlobalData said.

Ismail Patel, Enterprise Technology Analyst at GlobalData, said: “Chinese vendors, principally Huawei, are moving in to woo telcos and governments with the promise of improved infrastructure and an immediate boost to national economies, all of which dovetails with the digitalization of economies and the fulfilment of national visions. Offsetting this, the threat of US sanctions is delaying many countries from putting all their eggs in the Chinese basket.”

The first signs of conflict in the enterprise came when Huawei became the first cloud vendor to create a public cloud region in North Africa, starting with Johannesburg in 2018.

Then the UAE-based AI group G42 struck a $1.5 billion deal with Microsoft to "enhance the UAE’s position as a global AI hub" and "ensure the benefits of secure AI technologies and cloud capabilities are responsibly shared with growing economies globally."

But not with China, presumably.

"In a place like UAE ... where you had G42 working very closely with Huawei, for example, we have an interest in changing that picture," Tarun Chhabra, White House technology advisor, said last month.

"The effort to work with Microsoft as an alternative to Huawei is generally a positive development and one that we want to encourage."

GlobalData said "a microcosm" of the battle between the USA and China can also be seen in the Arabic LLMs now being built to meet the growing demand for generative AI.

The two most prominent models are made by Huawei and G42. Huawei’s Arabic LLM is based on 100 billion parameters, outpacing a 13 billion parameter model from G42, which is a Microsoft Azure-based Arabic LLM named Jais.

Another "area of interest" is the US-backed O-RAN (open radio access network), which is an emerging standard for cell towers that allows the use of tech from a variety of different vendors, drawing comparisons to Google’s Android ecosystem. President Biden has reportedly made "personal appeals" to the leaders in India, the Philippines, Saudi Arabia and other countries to adopt O-RAN.

However, China supports RAN (Radio Access Network) architecture, a more traditional solution, which means Huawei is not a member of the O-RAN club.

Operators in markets such as the UAE and Saudi Arabia are adopting O-RAN, but telcos in other MEA nations are going with Huawei to save on the costs of running composite networks.

Patel added: “Many operators and governments in MEA will continue to straddle the fine line between embracing capital-efficient Chinese technologies and locking themselves to them. Another consideration is the geopolitical backdrop concerning which of the two trade superpowers to align with. Answers will inevitably vary depending on whether the entity is a government, a large corporation, or an SME, as well as the immediate needs of the economy and business.”

Huawei is "bullish about its prospects in the region," GlobalData said. It has invested hundreds of millions of dollars in programs, including $300 million in Egypt alone to open the first public cloud region in Egypt, offering 200 services including AI data and development platforms.

Meanwhile, America is "adopting a defensive carrot-and-stick approach," offering incentives to high-value markets such as the Gulf States to encourage them to "replace and divest themselves from Chinese equipment" to avoid falling " into China’s orbit."

Patel concluded: “But whether or not the stick of US sanctions will be sustainable in the long term as a tool to counter the influence of Huawei and China is a question that is too complex for now. Also, it is contingent on a variety of factors such as geopolitics, the cost of Western equipment and technologies, the emergence of future cost-saving technologies (like network slicing, 6G, quantum communication, and enhanced edge computing), and most importantly, demonstrable success stories that can be replicated from first-tier to second-tier markets.”