Cisco, a U.S. tech giant, is looking towards a bright future with Chinese electric car companies as they expand their business globally. According to Ming Wong, vice president and CEO of Cisco Greater China, the electric vehicle (EV) segment is the second-largest source of revenue for Cisco in the Greater China region. Despite the escalating trade tensions and increased tariffs on imports of Chinese electric cars by the U.S. and potentially the European Union, Wong remains positive about the growth potential in this sector.
Chinese electric car manufacturers have been focusing on expanding their presence in international markets as competition within China becomes more intense. Companies like BYD are investing in setting up local factories overseas, indicating a strong commitment to global growth. Cisco is actively collaborating with at least 10 electric car customers as they establish factories, offices, and research and development centers in foreign countries.
While the imposition of tariffs and trade tensions may have some impact on the business operations of Chinese electric car companies, Cisco remains confident in the continued growth of this industry. The uncertainty surrounding the future spending for business expansion remains a concern, but experts like Shiv Shivaraman from AlixPartners predict an increase in manufacturing and office-related capital expenditures despite the challenges posed by tariffs.
Cisco has faced challenges in the Chinese market due to the increasing reliance on domestic players for national security reasons. The U.S.-China trade war has negatively affected Cisco’s revenue in China, with a 25% decline reported in the quarter ending in July 2019. CEO Chuck Robbins highlighted the difficulties faced by the company in bidding for projects and participating in business opportunities in China.
Despite the setbacks faced by Cisco in China, Ming Wong remains hopeful about the growth prospects for the business in the region. He emphasized that both state-owned and non-state-owned enterprises are looking towards Cisco as they expand globally, indicating a shift in focus for the company. Wong also mentioned the support received from Chinese internet companies like Alibaba and the opportunities arising from connecting different graphics processing unit providers in a market where Nvidia faces restrictions.
In Cisco’s latest quarterly report, total revenue saw a decline of 13% compared to the previous year, with revenue from the Asia-Pacific, Japan, and China region falling by 12%. Wong acknowledged the recent slump in revenue but highlighted the region’s potential for growth in the coming years. He expressed confidence in the Asia-Pacific region as a key area for Cisco’s highest growth potential.
Despite the challenges posed by trade tensions, tariffs, and market restrictions, Cisco remains optimistic about its business prospects with Chinese electric car companies and the overall growth potential in the Greater China region. By focusing on global expansion, connecting with key industry players, and adapting to the changing market dynamics, Cisco aims to navigate through the uncertainties and emerge stronger in the evolving business landscape.