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Cisco eyes China growth with $10B investment

U.S. networking giant unveils plan to spend US$10 billion over the next several years in the Chinese market, focusing on equity investment and research development.
Written by Eileen Yu, Senior Contributing Editor

Cisco Systems has unveiled plans to invest US$10 billion "over the next several years" in China where it will be looking to focus on innovation and research development.

Describing it as "a new chapter" for the company, the U.S. networking giant said it had signed a Memorandum of Understanding with China's National Development and Reform Commission (NDRC) to boost its investment in the local industry. Together with its Chinese partners, Cisco said its US$10 billion investment will go toward driving innovation, equity investment, R&D, and job creation.

The announcement came amid meetings in Beijing by retiring Cisco Chairman and CEO John Chamber and incoming CEO Chuck Robbins with China's vice prime minister Wang Yang and other government officials.

While in the Chinese capital, Cisco executives also signed agreements with the Association of Universities of Applied Science (AUAS) to develop training programs for local ICT skills. The networking vendor said it will invest in a four-year initiative, through its Cisco Networking Academy Program, with 100 universities of applied science recommended by AUAS.

Cisco has been operating in China for more than 20 years. Chambers said: "We look forward to furthering our digitization efforts, contributing to talent development and GDP growth opportunities in China."

It would be interesting to see how the U.S. company's gamble will play out in China, where it faces stiff competition from local players Huawei and ZTE.

Last year, Cisco reportedly invested US$1.7 billion a year in the Indian market and clocked quarterly growth rates. In comparison, its revenue in China had been dismal. In its most recent quarter results, its Chinese business dipped 20 percent while the company's overall Asia-Pacific sales climbed a slight 1 percent.

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