How Cisco Is Trying to Increase Penetration in China

Cisco to invest more than $10 billion in China

Last year, Cisco (CSCO) announced that it would invest more than $10 billion into China (FXI) over the next few years. China has historically promoted domestic companies at the expense of US-based companies including Qualcomm (QCOM), Intel (INTC), and Microsoft (MSFT).

China stated that it was not satisfied with the security of US technology after Edward Snowden revealed confidential information about the National Security Agency.

How Cisco Is Trying to Increase Penetration in China

Cisco is facing completion from Shenzhen-based Huawei and ZTE Corporation in the networking business segment. Cisco has stated that it’s open to forming partnerships in China.

Joint venture with Inspur Group

In September 2015, Cisco announced a $100 million joint venture with China’s information technology company Inspur Group. Cisco’s CEO stated that the joint venture would help to deliver advanced technologies and services in the cloud, information infrastructure, data centers, smart city, and big data spaces.

In China, Cisco has diversified its business strategy across customer segments. Cisco is not only aligned to state-owned enterprises, it’s also moving out and creating a commercial market strategy. Cisco is also expanding into second- and third-tier cities. The growth seen in China over the last quarter was very balanced across Cisco’s portfolio.

At the Goldman Sachs (GS) Technology and Internet Conference, Robbins stated, “We’re going to move away from being primarily in Beijing and Shanghai, and we’re going to build a strategy that moves out into more markets. We’re going to move from just being very highly reliant on state-owned enterprises to moving out and building a commercial midmarket, mid-enterprise strategy, and then also get very active in smart cities and things.”