American tech giant Cisco has been optimistic about its business with Chinese electric car companies expanding globally. Cisco’s Greater China head stated that electric vehicles are the company’s second largest segment in the region, with the majority of revenue coming from manufacturing companies, particularly electric cars.
Despite trade tensions and increased tariffs on Chinese electric car imports by the United States and possibly the European Union, Chinese manufacturers like BYD are investing in local factories to continue their growth. Cisco is working with at least 10 electric car customers as they expand overseas, supporting their efforts in building factories, offices, and research and development centers.
While the exact impact of this business expansion on spending is unclear, consulting firm AlixPartners predicts increased manufacturing and office-related capital expenditures. Cisco has faced challenges in the Chinese market, with CEO Chuck Robbins mentioning significant impacts from the trade war in 2019. Revenue in China declined by 25% in the quarter ending in July 2019, as the company faced difficulties in bidding for projects and was excluded from participating.
Looking ahead, Cisco is hopeful for growth in the Chinese market this year, with a focus on both state-owned and non-state-owned companies expanding globally. The company is also benefiting from partnerships with Chinese internet companies like Alibaba, as well as its ability to connect various graphics processing unit vendors in a market where NVIDIA is restricted.
In the last quarterly reporting period, total revenue for Cisco fell by 13% year-over-year, with revenue in Asia-Pacific, Japan, and China dropping by 12%. However, Cisco’s Greater China head anticipates rapid growth in the region over the next one to two years, emphasizing that Asia Pacific remains the company’s largest growth area. Cisco is optimistic about its future prospects in China and the broader Asia-Pacific region.
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https://www.cnbc.com/amp/2024/06/25/cisco-is-very-optimistic-about-its-growing-business-with-china-evs-.html