Brief news
- Cisco’s Greater China CEO, Ming Wong, expressed optimism about expanding business with Chinese electric car businesses as they expand internationally.
- Chinese EV companies expanded globally last year due to increased local competition. Trade tensions have increased, with the US and EU raising taxes on Chinese electric car imports.
- Cisco is helping at least 10 electric car customers create factories, offices, and R&D centers overseas. Wong expects China business development this year and is shifting its focus and portfolio to that side.
- Cisco draws backing from Chinese internet giants like Alibaba, which are expanding globally. Wong believes that the Asia-Pacific, Japan, and China revenue decline is from a high base and will increase faster in one or two years.
Illustrated news
Dalan, China— Cisco’s Greater China CEO expressed optimism about expanding business with Chinese electric car businesses, as they expand internationally, to CNBC on Tuesday.
Cisco earns most of its income in Greater China from industrial firms, and electric cars are the top category, said Ming Wong, vice president and CEO of Cisco Greater China.
Chinese EV companies expanded globally last year as local competition increased.
Trade tensions have increased, with the U.S. and presumably the EU raising taxes on Chinese electric car imports.
Their growth may not be limited. BYD and other Chinese automakers are building local factories.
Wong said Cisco, a networking equipment and software company, is helping at least 10 electric car customers create factories, offices, and R&D centres overseas.
At least as of now, we don’t hear [EV] customers saying, ‘Oh, because of this, we need to stop investing, or we need to slow down,'” he said.
“The opposite is true. A lot going on. We’ll see how this evolves as they keep pushing.”
Shiv Shivaraman, Asia region leader and partner and managing director at AlixPartners, said such business expansion is unknown how much it will create.
“But you should expect that there is going to be manufacturing-related capex as well as office,” he said. “I think tariffs will definitely accelerate, if not increase it.”
Regrowing China’s companies
The U.S. IT giant has struggled in China as the two countries increasingly rely on domestic companies for national security.
In 2019, Cisco CEO Chuck Robbins told analysts the U.S.-China trade war had a “significant impact” on its China operations.
Cisco reported a 25% yearly drop in country revenue in the quarter ending late July 2019.
“What we’ve seen is in the state on enterprises… we’re just being uninvited to bid,” Robbins said. “We can’t participate anymore.”
He also reported stronger carrier sales declines.
Wong expects China business development this year. He did not mention 2019 specifically.
He noted that state-owned and non-state-owned firms are using Cisco for worldwide expansion. “So we are shifting our focus and portfolio to that side,” Wong added.
Cisco draws backing from Chinese internet giants like Alibaba, which are expanding globally, according to Wong. According to him, Cisco benefits from connecting other GPU providers in a market where Nvidia is limited.
GPUs power the newest AI model training and implementation.
Cisco reported 13% lower sales in its latest quarterly reporting period, which ended in late April, with Asia-Pacific, Japan, and China revenue decreasing 12%.
Wong said the Asia-Pacific, Japan, and China revenue decline is from a high base and will increase faster in one or two years.
His words: “Asia Pacific is still the highest growth area for Cisco.”
Source : CNBC News
