Cisco’s Greater China head, Ming Wong, expressed his optimism about the growing business with Chinese electric car companies as they expand overseas. The electric vehicle (EV) segment is the second-largest for Cisco in the region, generating most of its revenue from manufacturing companies, with electric cars being the largest category. Chinese EV-makers have been increasing their global expansion efforts, despite trade tensions escalating with increased tariffs on Chinese electric cars by the U.S. and likely the European Union.
While Cisco has been successful in collaborating with at least 10 electric car companies as they build factories, offices, and research and development centers overseas, the company has faced challenges in the China market. The U.S.-China trade war has had a significant impact on Cisco’s business in China, with a 25% decrease in revenue in the country during a quarter in late July 2019. Cisco CEO Chuck Robbins highlighted that the company faced restrictions in bidding for projects in the state-run enterprises.
Despite the challenges faced in the China market, Cisco is hopeful for growth opportunities in the region. With both state-owned and non-state-owned businesses turning to Cisco as they expand globally, the company aims to shift its focus and portfolio in that direction. Chinese internet companies like Alibaba, expanding globally, also contribute to supporting Cisco’s business growth. Additionally, Cisco benefits from its ability to connect different graphics processing unit providers, particularly in a market where AI giant Nvidia faces restrictions.
In Cisco’s latest quarterly reporting period, total revenue fell by 13% from a year ago, with revenue in the Asia-Pacific, Japan, and China region declining by 12% during the same period. Wong mentioned that the recent slump in revenue in that region is off a high base and expects it to grow more quickly in the next one or two years. He emphasized that Asia Pacific remains the highest growth area for Cisco, indicating positive prospects for future growth in the region.
Cisco’s collaboration with Chinese electric car companies amidst global expansion efforts demonstrates the company’s commitment to driving business growth in the region. Despite challenges faced in the China market due to trade tensions and restrictions, Cisco remains optimistic about opportunities for growth, particularly with the increasing demand for networking equipment and software in the global market. By aligning its focus and portfolio with the expansion plans of state-owned and non-state-owned businesses, Cisco aims to capitalize on emerging trends and technological advancements to drive future growth in the region.