In a recent interview with CNBC, Ming Wong, the vice president and CEO of Cisco Greater China, expressed his optimism about the company’s expanding business with Chinese electric car companies as they venture into overseas markets. Despite trade tensions and escalating tariffs on Chinese electric cars from the United States and likely the European Union, Wong remains positive about the future. Cisco’s operations in Greater China have seen substantial revenue from manufacturing companies, with electric cars being the largest contributor in this segment.
The last year has witnessed Chinese EV-makers intensifying their efforts to expand globally as competition within the domestic market grows fiercer. Despite the challenges posed by trade tensions and tariffs, companies like BYD are investing in local factories to sustain their growth. Cisco, a tech giant providing networking equipment and software for businesses, has been collaborating with around 10 electric car customers as they establish factories, offices, and research and development centers in foreign markets.
Shiv Shivaraman, Asia region leader at consulting firm AlixPartners, highlights the potential increase in manufacturing-related capex and office-related capex as Chinese electric car companies expand globally. Though the exact spending remains uncertain, tariffs are expected to play a role in driving the acceleration of such investments. The evolving situation in the global market is pushing companies to push forward and embrace growth opportunities despite the challenges.
While Cisco has shown steady growth in working with Chinese electric car companies, the company has faced challenges in the China market due to geopolitical tensions and concerns around national security. Cisco CEO Chuck Robbins previously mentioned the impact of the U.S.-China trade war on the company’s operations in China, resulting in a significant decline in revenue. Despite these obstacles, Cisco remains committed to serving both state-owned and non-state-owned businesses as they expand their presence globally.
Looking ahead, Ming Wong is hopeful about the growth prospects for Cisco in China this year, emphasizing the shift in focus towards state-owned and non-state-owned companies expanding globally. Additionally, Wong highlights the support from Chinese internet companies like Alibaba, aiding Cisco’s business growth. With the ongoing restrictions on AI technology providers like Nvidia, Cisco’s ability to connect different GPU providers has positioned the company as a valuable player in the market.
In the latest quarterly reporting period, Cisco reported a 13% decline in total revenue from a year ago, with a 12% fall in revenue from Asia-Pacific, Japan, and China specifically. Despite the recent slump, Wong remains optimistic about the region’s growth potential, expecting to see faster growth in the next one to two years. Asia Pacific continues to be a high-growth area for Cisco, highlighting the company’s commitment to expanding its presence and driving innovation in the region.
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