Cisco’s Greater China head expressed “very optimistic” views on the growing business with Chinese electric car companies as they make their way into the global market. The electric vehicle (EV) segment has become Cisco’s second-largest sector in the region, with most revenue coming from manufacturing companies. Within this category, electric cars take the lead, indicating a substantial business relationship with Chinese EV-makers.
Chinese electric car manufacturers have been rapidly expanding globally, despite escalating trade tensions between different countries. The U.S. and the European Union have raised tariffs on Chinese electric car imports, but this has not deterred the growth of Chinese automakers. Companies like BYD have invested in local factories to establish a stronger presence in international markets. This move has allowed Cisco to collaborate with over 10 electric car customers in building factories, offices, and research centers abroad.
Although Cisco has faced challenges in the China market due to increasing reliance on domestic players for national security reasons, the tech giant remains hopeful. State-owned and non-state-owned businesses turning to Cisco for global expansion are driving growth opportunities. The company is strategically shifting its focus and portfolio to cater to these businesses, in addition to benefiting from partnerships with expanding Chinese internet companies like Alibaba.
Cisco’s revenue in the China market witnessed a significant decline, particularly during the U.S.-China trade war. Despite the setbacks, the company is looking towards returning to growth in the upcoming year. The Asia-Pacific, Japan, and China regions experienced a 12% revenue decrease in the latest quarterly reporting period, but this is seen as a temporary slowdown on a high base. With expectations of accelerated growth in the next one to two years, Wong emphasized the Asia Pacific as the highest growth area for Cisco.
Cisco’s networking equipment and software play a crucial role in supporting the global expansion of Chinese electric car manufacturers. The company’s ability to connect various graphics processing unit providers has become essential, especially in a market where AI giant Nvidia faces restrictions. Graphics processing units are vital in driving the latest AI models’ training and implementation, showcasing Cisco’s technological significance in the evolving landscape of electric vehicles and artificial intelligence.
Overall, Cisco’s collaboration with Chinese electric car companies reflects a promising business outlook amidst trade challenges and evolving market dynamics. The strategic partnerships forged by Cisco in the Greater China region underline the tech giant’s commitment to innovation and growth in an increasingly competitive global landscape.