Cisco to pour BEELIONS into China

Turnaround strategy: talk to the big boss, pay 'taxes' in form of local alliances and JVs


Just days after emptying out some corner offices in China, Cisco says it's going to pour US$10 billion into developing business in the Middle Kingdom.

The Borg has posted an announcement that it's signed a memoranda of understanding (MoUs) with China's National Development and Reform Commission (NDRC), and with the Association of Universities (Colleges) of Applied Science (AUAS).

The NDRC MoU lets Cisco expand its investments in China, with unspecified equity investments in local businesses, R&D and job creation, “while actively helping meet the country’s long-term goal of innovation-driven development.”

Under the educational MoU, Cisco will drop its Networking Academy Program into 100 universities/colleges of applied sciences – selected by the AUAS – over four years.

China is far kinder to western businesses when they make local investments, so the new MoU and plans to invest in Chinese organisations can be seen as the price of entry to the market. With these boxes ticked, China should become an easier place for Cisco to do business. Talk of post-Snowden suspicions should dampen and Huawei will know - and be told - it doesn't and can't have things its own way.

Those changes should mean Cisco's weak overall Asia-Pacific regional growth has a better chance of turning around. That the region is a sore point for Cisco was revealed in May by outgoing CEO John Chambers, who complained that the one per cent APAC growth reported in the April quarter would have been eight per cent but for China's weakness.

Last week, China president Hahn Tu and VP Fredy Chung were reportedly asked to step down.

The China deal follows a charm offensive by outgoing Chambers and CEO-designate Chuck Robbins, who held meetings with “Chinese Vice Premier Wang Yang and leaders of other government agencies in Beijing”. ®

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