As Chinese electric car companies continue to expand overseas, Cisco’s Greater China head expresses optimism about the growing business opportunities in the Electric Vehicle (EV) segment. Cisco, known for providing networking equipment and software for businesses, has identified the EV segment as its second-largest revenue source in the Greater China region. Ming Wong, vice president and CEO of Cisco Greater China, mentioned that most of the company’s revenue in Greater China comes from manufacturing companies, with electric cars being the largest category.
Chinese automakers have been aggressively pursuing global expansion strategies as domestic competition in the EV sector intensifies. Despite trade tensions and escalating tariffs on imports of Chinese electric cars by the U.S. and possibly the European Union, Chinese EV-makers like BYD are investing in local factories to support their overseas growth. Cisco is actively collaborating with around 10 electric car customers as they establish factories, offices, and research and development centers internationally.
However, Cisco has faced challenges in the Chinese market due to increasing reliance on domestic players for national security reasons. Cisco CEO Chuck Robbins previously mentioned that the U.S.-China trade war had a significant impact on the company’s business in China, resulting in a 25% decline in revenue in the country. The company encountered restrictions in bidding for state-owned enterprises and saw a decline in sales to carriers. Despite these obstacles, Wong remains hopeful that Cisco’s business in China can return to growth, especially as state-owned and non-state-owned businesses turn to Cisco for their global expansion initiatives.
To navigate the changing landscape in the China market, Wong highlighted that Cisco is shifting its focus and portfolio to cater to the needs of state-owned and non-state-owned businesses looking to expand globally. Additionally, the company is benefiting from partnerships with Chinese internet companies like Alibaba that are also expanding internationally. Wong pointed out that Cisco’s ability to connect different graphics processing unit (GPU) providers together is a valuable asset, especially in a market where AI powerhouse Nvidia faces restrictions.
Revenue Performance and Growth Prospects
In Cisco’s latest quarterly report, total revenue saw a 13% decline compared to the previous year, with revenue in the Asia-Pacific, Japan, and China region dropping by 12%. Despite this recent slump, Wong emphasized that the Asia-Pacific region remains the highest growth area for Cisco. He anticipates a quicker growth trajectory in the coming years, particularly in the next one or two years. With the ongoing evolution of the EV segment and the global expansion of Chinese electric car companies, Cisco is poised to capitalize on emerging opportunities and drive future growth in the region.