In a recent interview with CNBC, Ming Wong, the vice president and CEO of Cisco Greater China, expressed Cisco’s optimism about its growing business with Chinese electric car companies as they expand overseas. Despite escalating trade tensions, Wong remains positive about the potential for growth in the EV segment, which is currently Cisco’s second-largest business sector in the region. Chinese EV makers have been increasing their global expansion efforts, with companies like BYD investing in local factories to mitigate the impact of tariffs imposed by the U.S. and potentially the European Union.
While Cisco sees significant opportunities for business growth with Chinese electric car companies, the U.S.-based tech company has faced challenges in the China market. The evolving geopolitical landscape and growing emphasis on national security have resulted in Cisco being excluded from bidding on certain projects in China. CEO Chuck Robbins acknowledged the impact of the U.S.-China trade war on Cisco’s business in the country, with revenue falling by 25% in the quarter ended July 2019. Despite these challenges, Wong remains hopeful that the China business can return to growth this year by shifting focus to state-owned and non-state-owned businesses looking to expand globally.
In addition to expanding its business with Chinese electric car companies, Cisco is also benefiting from partnerships with Chinese internet companies like Alibaba that are expanding globally. Wong highlighted Cisco’s ability to connect different graphics processing unit providers in a market where AI giant Nvidia faces restrictions, positioning the company well in the rapidly growing AI sector. Despite a 13% decline in total revenue in the latest quarterly reporting period, Wong emphasized that the Asia-Pacific, Japan, and China region remains the highest growth area for Cisco, with expectations of accelerated growth in the next one to two years.
As Chinese electric car companies continue to expand globally and trade tensions persist, Cisco remains committed to supporting their growth by providing networking equipment and software for their overseas operations. Wong emphasized that the company is actively working with at least 10 electric car customers as they build factories, offices, and research and development centers abroad, indicating a strong commitment to the evolving EV segment. Despite uncertainties surrounding spending related to cross-border business expansion, industry experts like Shiv Shivaraman anticipate a surge in manufacturing and office-related capex accelerated by tariffs and regulatory changes.
While Cisco’s business with Chinese electric car companies faces challenges in the current geopolitical environment, the company remains optimistic about future opportunities for growth and innovation in the evolving EV sector. By leveraging its expertise in networking equipment, software, and AI technologies, Cisco is well-positioned to support the global expansion efforts of Chinese EV makers and capitalize on emerging trends in the automotive industry.