Can the Chinese premier Xi Jinping’s visit to US help west technology sales in the east
The companies are discussing options that include Inspur reselling Cisco networking gear and jointly developing hardware
Believed to a difficult terrain for Cisco for a decade and obviously so due to the nationalistic agenda of China which prefers the domestic manufacturers over the outside brands, the giant is seem to be taming the dragon finally during the Chinese premier Xi Jinping’s visit to Seattle.
If it is to be believed from various news agencies and web sites Cisco will work with Chinese server maker Inspur Group Co.
As per the Wall Street Journal yesterday, Mr. Xi was scheduled to meet with major technology-industry figures, including Apple Inc.’s Tim Cook and Microsoft Corp. ’s Satya Nadella. The presence of many senior tech leaders underscores how important the Chinese market is to U.S. companies. He is also carrying a group of 15 CEOs of his country’s biggest companies, representing a combined market cap of nearly $1 trillion.
The same report says that this time the Chinese love for Cisco is better given the fact that Cisco served as a key supplier when China first built its Internet backbone. But Cisco has suffered from post-Snowden security concerns and local competitors such as Huawei Technologies Co. Cisco’s market share in routers sold to China stood at just 10.8% in the second quarter of 2015, while Huawei accounted for 67% of the market, research firm IHS estimates. (Cisco accounted for more than half of router sales in China there a decade ago, Bernstein Research estimates.)
As per the reports flying, the companies are discussing options that include Inspur reselling Cisco networking gear and jointly developing hardware, said people with knowledge of the talks. The investment Cisco is discussing with Inspur is small, one of those people said, but the relationship could expand over time.
The Wall Street Journal also writes that Cisco’s China business took a bigger hit with Mr. Snowden’s revelations in 2013 that the U.S. government installed modifications in U.S.-made gear to spy on foreign governments, along with a photo released by Mr. Snowden the following year that appeared to show NSA personnel intercepting Cisco equipment before export. Cisco executives said they were unaware of any such actions by the NSA. The NSA has declined to comment on the allegations, adding that it focuses only on technology used by foreign intelligence targets.
Some of Cisco’s Chinese customers found excuses to turn to local providers, according to more than a dozen current and former Cisco executives and managers. The company and other U.S. technology suppliers were removed from supplier short lists for some state-owned buyers, which made it harder to win some government deals, these people said.
In this era of distrust between two countries and Chinese local companies’ bosting policy, can Cisco efforts hold the ground? If it does should it go on reselling and development of networking gears or go IBM rout by divesting some of its low margin business to the Chinese counterpart?
Of course the Chinese premier has already pledged to work with United States on fighting cybercrime front.
