With a buoyant outlook, Cisco anticipates substantial growth in its collaborations with Chinese electric vehicle (EV) manufacturers as these firms extend their global influence, says Ming Wong, Cisco’s Greater China Vice President and CEO.
Cisco identifies the EV industry as a major contributor to its Greater China revenue, ranking second after its manufacturing sector. Within this domain, electric automobiles represent the most significant portion, indicative of the strong market for Cisco’s technology solutions within Chinese EV circles.
Amidst fierce domestic market rivalry, Chinese EV developers are enhancing their presence worldwide. This strategic move persists even as trade frictions intensify, resulting in the United States and potentially the European Union setting higher import duties on Chinese electric vehicles. Firms such as BYD are mitigating these barriers by establishing manufacturing plants in overseas territories.
Engaging with over a dozen electric vehicle clientele, Cisco provides support in constructing facilities, offices, and R&D hubs internationally. Wong addresses the belief that these companies might curb their expenditures due to trade discord, explaining, “On the contrary, a lot of activity is taking place. They are steadfast in their endeavors, and time will tell how things transpire,” he asserted.
The future financial commitment spurred by these international pursuits is not clearly defined, comments Shiv Shivaraman of AlixPartners, serving as the Asia Region Leader and Partner. Nonetheless, he foresees significant outlays for manufacturing and office enlargements. “Tariffs are likely to expedite and possibly intensify these investments,” predicts Shivaraman.
Overcoming Hurdles in the Chinese Marketplace
Cisco has encountered setbacks in China amidst a growing preference for domestic suppliers by both the U.S. and China due to security worries. Chuck Robbins, CEO of Cisco, reported a striking 25% slump in the company’s China-based revenue in a single quarter of 2019, citing the consequences of the Sino-American trade impasse. Robbins indicated that Cisco experienced exclusion from contract competitions, alongside a precipitous drop in carrier sales.
Regardless of these impediments, Wong is confident in Cisco’s potential to revitalise its market share within China during the current year. Cisco is gaining traction among both government-linked and independent Chinese entities focusing on internationalization. “Our strategy and offerings are pivoting to cater to these sectors,” articulated Wong.
Cisco also derives growth from Chinese tech titans like Alibaba, which are broadening their global footprint. Additionally, Cisco’s position is strengthened by its capacity to interlink varied graphics processing unit (GPU) vendors, especially in a marketplace faced with constraints on AI leader Nvidia.
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