Friday, June 17, 2005

Cisco's China Plans

From Asia Times Online: Cisco plans for China

"Cisco's latest moves in China include opening a Urumqi representative office and expanding the Shanghai research and development center this month. The Shanghai center will start with the telecom sector and expand to other areas in future. Built at a cost of $32 million, it is recruiting around 100 Chinese engineers to work better in the local market and cut costs."

"Cisco entered China 11 years ago. So far it has invested in six Chinese companies, including the Shanghai-based Shanda Interactive Entertainment, the biggest Chinese online game operator. All Cisco's acquisitions in China are made through the Softbank Asia Infrastructure Fund, set up by Cisco and Japan's Softbank. "Our investment returns from China are better than those from America," Chambers (CEO of Cisco Systems) said."

"Cisco, with routers and switches as its core products, faces challenges from major Chinese companies like Huawei Technologies and ZTE Corporation, which are quickly expanding in both domestic and overseas markets, with cheaper products. "We don't have an architecture business competitor; competition comes from one or two products, and competition varies by market," Chambers said. Cisco routers have competitors in China like Huawei and ZTE, but "we don't compete much", said Volpi (Cisco's senior vice president), who is also the general manager of Cisco's Routing Technology Group. Cisco has 70% of the market share in routers globally, he said. Volpi also ruled out the possibility of Cisco buying Huawei. The company is expected to manufacture 40% of its products in China in the coming years to cut costs. All Cisco's products are produced through outsourcing."

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