Cisco Systems will invest $10 billion to projects in China over the next several years, the latest move by a tech company to expand their presence in the massive and potentially lucrative market.
The giant networking vendor announced the investments June 17 during a trip to the country by CEO John Chambers and Chuck Robbins, the executive who will replace Chambers next month. The $10 billion represents only the latest efforts Cisco has made in China over the past two decades. The investments will be used to support innovation and development initiatives within the country around such areas as cloud computing. Cisco officials did not delve into specifics.
At the same time, the vendor is focusing on partnerships, signing Memorandums of Understanding (MoUs) with both China's National Development and Reform Commission, which is charged with growing investments in the country for work in such areas as innovation, R&D and job creation, and with the Association of Universities of Applied Science (AUAS), which is tasked with improving information and communications technology training. Through Cisco's existing Networking Academy Program, the company will invest in a four-year program with 100 universities of applied science, which will be recommended by AUAS.
"Cisco is deeply committed to our Chinese partners," Robbins said in a statement. "With these new partnerships and initiatives, Cisco is investing in the next generation of Chinese technology innovation, helping capture the opportunities presented by digitization and committing Cisco resources to ensure success together."
The vendor's investments come as Chinese officials continue to push for local businesses to buy technology developed and built by Chinese vendors. China and the United States for several years have traded shots regarding cyber-espionage—as highlighted by the recent hacking of computers of the U.S. Office of Personnel Management allegedly by Chinese interests that compromised the personal data of millions of U.S. government workers—and the use of technology from foreign vendors. U.S. lawmakers have questioned whether technology from such Chinese vendors as Huawei Technologies, ZTE and Lenovo post a national security threat.
Chinese officials have countered that U.S.-based companies like Intel and Cisco pose similar threats.
Still, U.S. vendors continue to look to grow their presence in the country. For example, Intel last year announced it was investing $1.5 billion in Chinese chip maker Tsinghua Unigroup, giving it a 20 percent stake in the state-owned venture that runs Chinese chip designers RDA Microelectronics and Spreadtrum Communications, and is partnering with Rockchip to create Intel-based systems-on-a-chip (SoCs) for tablets.
Intel in 2014 also created a $100 million fund and is building an innovation center in China to fuel the development of smart systems, such as smartphones and wearable devices, powered by its processors, and in December 2014 said it was spending another $1.6 billion over 15 years to upgrade a chip plant in China.
During its initial conference in March, officials with the OpenPower Foundation said they want their products to become the alternative to Intel in the data center, both in China and across the globe.
Cisco's announcement also comes as the company begins to shed some top-level executives from its Chinese operations in the wake of slumping sales in the country as Chinese officials continue their push for independence from technology products from outside vendors.