Prof. Dr. Emre Alkin, Economist, Istanbul Topkapi University
Amidst the excitement and question marks created by the BRICS summit, the world once again recognises that the next biggest global megatrend is 5G.
5G technologies have the power to connect not only different geographical regions or objects to each other via the IoT, but also different approaches, cultures, knowledge and it can even bring more understanding that will eliminate meaningless hatred. Like any word that comes out of our mouths can lead to undesired misunderstandings, this can happen between governments as well. Since governments have less thought flexibility than people, they cannot always find themselves capable of being open for dialogue therefore resolving misunderstandings. Knowing that 5G is the most important invention for the fastest, most reliable and complete transfer of data from point A to point B, all we need to do is convince people to bring humanity closer together. Of course, it is easier said than done. To convince people sometimes needs an explicit explanation of the amount of resources and time we have lost or wasted due to our stubbornness.
Having introduced the Industry 4.0 concept, made a considerable research effort to develop and implement Industry 4.0 technologies, Europe needs to sustain an uninterrupted digital infrastructure in order to go beyond putting robots in factories. Of course, they can develop such an infrastructure, but if they agree to cooperate with China, which has already achieved this, they will save money tremendously in the long run.
Some European companies in China have higher market penetration than their Chinese counterparts, which does not bother the Chinese, because in market economies, both producers and consumers normally do not spoil a good situation with “national sentiments”. True patriotism is to know when to take that leap for your country. As a matter of fact, there have been deeper and bigger adversities between the Turks and the Chinese than those between the Western World and China. But, neither Turkey nor China cares too much about those past issues.
Because the diplomacy that both countries conduct is based on facts, needs and grounded plans. As a NATO member, Turkey has gone through some big difficulties while trying to keep an equal distance from both the Middle East and Russia, as well as the US and the West, and of course, China. Because as much as being close at an equal distance, you need to also stay away at an equal distance due to necessities. So, although Turkey knows who is the right supplier is, it has to stay away because of diplomatic sensitivities. However, Turkey is running late and still has a lot of work to do.
Such as, Turkey needs to make at least 50 billion dollars’ worth of investment in industry 4.0 and it has to do it in the most affordable way possible and with the highest quality. Besides, there are sectors which supply chains need restructuring. They need to be relocated closer to the market and their network connections need to be re-established. I am talking about an investment of 100 to 150 billion dollars in sum.
Lately, Europeans have been giving the impression that they would stop the anti-Chinese sentiment, but they had to get closer to the US again through NATO because of Russia’s invasion of Ukraine. To protect themselves they accepted the United States as their “powerful ally” again. For this reason, they cannot come together with Chinese companies and have their industry 4.0 breakthrough. But the train is about to leave the station. The more they delay, the higher the cost will be.
Say, you need to throw 10 bags of gravel in the sea to build a pier. But instead, you decide to throw four of these bags at night, and the rest in the morning. When you come by the shore in the morning, you see two bags of the gravel you threw in the sea at night were swept by the waves. And you are left with no other option but to throw 12 bags of gravel in total. What I mean is if we don’t change our ways, we keep paying higher costs.
If European governments can quickly build the 5G infrastructure required for industry 4.0, they are likely to increase the global GDP by 1.3 trillion dollars in 2030. Research efforts and studies in which I have personally taken part show that 5G technologies can help companies grow their revenues by 15% to 25% higher than projections.
Fortunately, some European companies do not agree with their governments and they have decided to openly work with Chinese digital solution partners. But there are also those who do not. According to a report by the European Commission, some countries, such as Estonia, Latvia, Belgium, Romania, and Sweden, have failed to meet the “5G population coverage” criterion. 10 EU states have imposed restrictions on “high-risk telecom suppliers” such as Huawei. I can understand that the Baltic States and Sweden, which are creating disturbances for Russian Diplomacy, are pro-American, but I cannot understand why Romania and Belgium are acting the same way. Undoubtedly, their decision will cause them to lag behind other countries in industry 4.0. These countries have also been in decline in terms of connectivity since 2020, according to the European Commission’s Digital Economy and Society Index (DESI).
Despite national legislation banning high-risk suppliers, the smart solutions of Chinese companies continue to add value to people’s lives in many European countries and especially in China. For example, in Tianjin, AI was used to start a fully automated 5G-based warehouse and dock activity. Chinese electrical appliance manufacturer, Midea Group has launched a facility that is fully interconnected with 5G, and since October 2022, the East-West Gate Intermodal Terminal (EWG) in Hungary operates a smart railyard that is equipped with Huawei 5G networks.
Such measures banning Huawei from core networks caused a serious problem for the two economic giants of Europe, Germany and the UK. The FT’s report says that the United Kingdom, which had launched 5G commercially in 2019, fell behind Germany, France and the Netherlands in terms of download speed. The ban has also caused 5G coverage to drop from 82% to 20%, which obviously affects the growth figures.
In 2020, Hannes Ametsreiter, CEO of Vodafone Germany, had said that Europe could pay a big price for banning Huawei, both politically and technically. Ametsreiter kept repeating that, instead of producing horror scenarios, Europe should always keep an open dialogue with Huawei, and technical solutions such as encryption could overcome this paranoia. Perhaps it would be better to be in closer contact with the Chinese regarding the protection of trade secrets. While the West should try to reduce its paranoia, China needs to showcase that the country has transformed from “copy & paste” into an innovation powerhouse.