Cisco ramps up China investment

Cisco plans to invest as much as $16 billion over the next five years in China. That's nearly double the $8.5 billion Cisco has committed to China since 2002.

Cisco CEO John Chambers outlined Cisco's three to five year plan at a shindig Thursday in Beijing. There are a few notable motives here. For starters, Cisco is targeting an emerging market for future growth. A bigger China footprint is necessary since rival 3Com will be owned by local networking favorite Huawei Technologies. Meanwhile, Cisco is bolstering its access to cheap components. And by playing ball with the Chinese government, Cisco has a better chance to protect its intellectual property.

Here are some of the moving parts announced by Cisco:

• An increase in local parts purchases. Since 2002, Cisco has bought more than $7 billion in China components and services.
• An expansion of Cisco's education, research and development and direct investments in China.
• A memorandum of understanding with China Development Bank to invest in Chinese startups. The initial focus is information technology and green technology.
• Plans to open 300 Cisco Networking Academies in China over the next three years. These academies, built in conjunction with China's Ministry of Education, are housed in vocational colleges. Cisco has 200 of these academies so far. Cisco will donate $6 billion in networking gear to the academies.
• A deal with Alibaba, China's B2B portal, to develop services for small and mid-sized businesses in China. Cisco is also investing $17.5 billion in Alibaba, which goes public in Hong Kong next week.
• Another $400 million in funding for Cisco's financing unit in China. These funds are designed to finance China facilities for Cisco customers.
• Plans to create a green technology center to address emission reductions, electronic waste and sustainable energy in China.

On Wednesday, Cisco outlined a partnership with Wipro in India.