Any mobile operator wanting to do government business in the U.K., France or Germany these days probably needs to pledge not to lean on gear from Huawei Technologies Co Ltd. However, what amounts to a de facto ban on the Chinese firm’s telecoms equipment isn’t enough to secure the national interest. It omits one key consideration: connected factories.

Orange SA CEO Stephane Richard reiterated on Tuesday that the former French former national carrier wouldn’t be using equipment made by Huawei in its 5G networks amid cybersecurity concerns. The U.K.’s BT Group Plc is already removing gear made by the Chinese company from its existing mobile network, and Germany’s Deutsche Telekom AG is reviewing its procurement strategy. None of these European governments have yet issued a formal prohibition on the sale of Huawei’s technology.

But if it’s true that Huawei’s equipment is vulnerable to exploitation by Chinese state actors, then industrial firms’ chief technology officers need to be as cognizant of the threat.

Whereas in the past smart factories might have used Wi-Fi or LTE networks to allow machines to talk to one another, they’re set to shift to 5G. The new technology is able to transmit greater volumes of data at lower latency, which allows for clear improvements in efficiency and flexibility. Global spending on LTE/4G and 5G equipment for private networks is likely to double from current levels to $5 billion a year by 2021, with the load increasingly focused on 5G, according to market intelligence consultancy SNS Telecom & IT. That would represent a sizable proportion of the total spending on telecoms equipment, which IHS Markit estimates will top $25 billion in 2022.

Huawei collaborates with industrial giants such as Siemens AG and Honeywell International Inc. on some technologies, offering joint solutions where the firms’ products are engineered to work together seamlessly, and then sold in a package to customers. Those kinds of alliances seem to have stayed beneath the radar amid the recent hullabaloo. So has the potential impact on the great swat of unlisted companies in Europe whose factories could benefit from the efficiencies that Huawei’s gear could bring.

Chinese President Xi Jinping admitted last year that the U.S. has “reasonable concerns” about Chinese firms stealing intellectual property with the help of state bodies. The Americans, Australia and New Zealand have banned the gear from use in government contracts, meaning the likes of AT&T Inc. and Verizon Corp. all but avoid using Huawei.

However, the prospects of a formal ban from France or Germany appear slim. It’s unlikely that either country would want to risk China responding with a prohibition on the sale of BMW AG cars, for instance, or goods made by luxury giant LVMH.

Because phone companies largely compete domestically, it’s easier for them to decide to drop Huawei — they’re all on a level playing field in bidding for government contracts. But companies in other industries that compete globally face a far trickier scenario. Given that Huawei’s technology is as much as a year more advanced than that of Nokia and Ericsson, forgoing its equipment might leave factories disadvantaged when compared to their peers elsewhere in the world who don’t have similar security qualms.

So far, it hasn’t been demonstrated that Huawei does actually build any backdoors. None of the 5G equipment has yet been deployed, so it’s all but impossible to tell. The issue creates a quandary for CTOs: Are they willing to sacrifice a competitive advantage for the as-yet-unproven risk of losing key technologies to malicious actors?

It’s a hard choice, and perhaps the best outcome a CTO can hope for is that the risks posed by Huawei equipment prove to be overblown, and are in fact more a political calculation designed to rein in China’s lead in 5G technology. But it’s some gamble.

To contact the author of this story: Alex Webb at awebb25@bloomberg.net

To contact the editor responsible for this story: Jennifer Ryan at jryan13@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alex Webb is a Bloomberg Opinion columnist covering Europe’s technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.

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