Cisco is expressing a great deal of optimism regarding its business expansion with Chinese electric car companies as they continue to expand overseas. According to Ming Wong, vice president and CEO of Cisco Greater China, the electric vehicle (EV) segment is currently the second-largest for the U.S. tech giant in the region. Chinese EV-makers have been increasing their global presence in response to heightened domestic competition, despite facing escalating trade tensions with the U.S. and possibly the European Union.
Challenges and Opportunities
Although there have been challenges due to trade tensions and restrictions, Cisco remains committed to its partnerships with at least 10 electric car customers who are venturing into establishing factories, offices, and research and development centers in other countries. Shiv Shivaraman, from consulting firm AlixPartners, suggests that business expansion will involve significant manufacturing-related capital expenditure as well as office-based investment. It is anticipated that tariffs will play a role in accelerating and potentially increasing these expenses.
The U.S.-based tech company has faced obstacles in the Chinese market, where increasing reliance on domestic players has impacted its revenue. Despite a 25% decline in revenue in China for a quarter that ended in July 2019, Cisco remains hopeful for future growth opportunities in the region. Wong highlighted the shift in focus towards serving both state-owned and non-state-owned Chinese businesses that are looking to expand globally. Additionally, Chinese internet giants like Alibaba are contributing to Cisco’s business growth by expanding internationally.
Looking ahead, Wong expressed optimism regarding the potential for growth in the coming years, especially in the Asia-Pacific, Japan, and China region. While total revenue fell by 13% in the latest quarterly reporting period, Wong emphasized that this decline was from a high base and anticipates a quicker growth trajectory in the next one or two years. He specified that the Asia-Pacific region remains the highest growth area for Cisco, highlighting the company’s enduring commitment to the market.
Cisco’s outlook on its business expansion in China remains positive, despite challenges posed by trade tensions and evolving market dynamics. By continuing to nurture partnerships with Chinese electric car companies and other industry players, Cisco is positioning itself for sustained growth and global success in the evolving tech landscape.
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