Cisco started operations in China in 1994.
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Dalian, China- Cisco The company’s head of Greater China told CNBC on Tuesday that the company is “very optimistic” about growing business as Chinese electric vehicle companies expand overseas.
Huang Ming, vice president and CEO of Cisco Greater China, said that the electric vehicle field is the U.S. technology giant’s second largest business in the region – most of Cisco’s revenue in Greater China comes from manufacturing companies, of which electric vehicles are the largest category.
Chinese electric car makers stepped up their global expansion efforts last year as domestic competition intensified.
However, trade tensions escalated, with the United States (and possibly the European Union) raising import tariffs on Chinese electric vehicles.
This doesn’t necessarily limit their growth. Chinese automakers such as BYD are investing in local factories.
Wong said Cisco, which provides networking equipment and software to businesses, is working with at least 10 electric vehicle customers to help them set up factories, offices and research and development centers overseas.
“At least so far, we’re not hearing (electric vehicle) customers say, ‘Oh, therefore, we need to stop investing, or we need to slow down,'” he added.
“It’s actually the opposite. There’s a lot going on. They’re going to keep pushing and moving forward and we’ll see how this develops.”
Shiv Shivaraman, partner and managing director, head of Asia at consultancy AlixPartners, said it was unclear how much expenditure such business expansion would incur.
“But you should expect there will be manufacturing-related capital expenditures as well as office-related capital expenditures,” he said. “I think tariffs will certainly accelerate, if not increase.”
Let Chinese enterprises resume growth
The U.S. technology company has encountered challenges in the Chinese market as both countries increasingly rely on domestic companies in the name of national security.
Cisco said at the time that its revenue in the country fell 25% on an annualized basis in the quarter ended in late July 2019.
“What we’re seeing is the state’s attitude towards business… We just – we’re not being invited to bid,” Robbins said. “We’re not even allowed to participate anymore.”
Sales to operators have also dropped significantly, he said.
Looking ahead, Mr. Huang hopes that the China business will resume growth this year. He did not specifically mention the 2019 period in his speech.
He noted that both state-owned and non-state-owned companies are turning to Cisco as they expand globally. “So we are shifting our focus and portfolio towards this,” Huang said.
Also supporting Cisco’s business are Chinese Internet companies, such as Alibaba The businesses are expanding globally, Wong said. Cisco also benefits from its ability to connect different graphics processing unit providers together in the artificial intelligence giant’s market, he added. Nvidia restricted.
GPUs are systems-on-a-chip that power the training and implementation of the latest artificial intelligence models.
In Cisco’s latest quarterly report as of the end of April, total revenue fell by 13% year-on-year, with revenue in the Asia-Pacific region, Japan and China falling by 12% over the same period.
Huang pointed out that the latest decline in revenue in Asia Pacific, Japan and China was caused by a high base, and he expected faster growth in the next year or two.
“The Asia-Pacific region remains Cisco’s fastest-growing region,” he said.
—CNBC’s Jordan Novet contributed to this report.
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