Cisco to spend US$16b in ChinaCisco Systems Inc, the world's largest networking equipment maker, yesterday unveiled a US$16 billion expansion plan to boost its presence in China, one of the world's most dynamic telecom markets.
The plan includes expanding its procurement, manufacturing and research and development capacity, and increasing investment in China's education sector and high-growth companies through its venture capital vehicle.
"We are going to the next chapter in China," said John Chambers, chairman and CEO of Cisco. "The announcements underscore both China's strategic importance to Cisco's global operations and the broad range of growth opportunities presented by the market."
The plan, following a pledged investment of US$1.16 billion in India on Tuesday, underlines Cisco's increasing aggressiveness in cracking emerging markets. It pledged a US$1.16 billion investment in India within two years.
A large portion of the US$16 billion in China would be spent on procurement, which totaled US$7 billion in the past five years.
As part of the new initiative, Cisco said it will spend US$17.5 million buying into China's top e-commerce firm Alibaba.com, which is expected to launch an initial public offering in Hong Kong next Tuesday.
Cisco also signed a memorandum of understanding with China Development Bank to set up a US$100 million program to provide capital and expertise for high-growth Chinese companies. Cisco has invested more than US$700 million in Chinese start-ups over the past few years.
It also agreed to inject US$400 million into a wholly owned subsidiary in China that specializes in financing and leasing services.
The subsidiary, Cisco Systems Capital China, began operation in 2006, aiming to provide financing facilities to Cisco's customers in China.
"We are now seeing more and more innovations coming for the market," said Chambers.
(China Daily November 2007)
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