TheLowDown Monthly Newsletter
November 2007
Cisco Increases Investments in China
Cisco announced a multi-year investment initiative aimed
at strengthening their business commitments and
long-term corporate strategy in China. Cisco Chairman and CEO John
Chambers defines a three- to five-year plan of
increased investment in China.
"Cisco's multi-year investment program will
include:
- A significant increase in local procurement.
In the past five years, Cisco has purchased more
than USD $7 billion worth of China-sourced
components and services, a critical part of the
company's virtual manufacturing supply chain.
According to Cisco estimates, these procurement
commitments provide employment to 50,000 people
in manufacturing management roles and through
contract manufacturing and supplier partners.
- The total value of Cisco's commitments in
China since 2002 are estimated at more than USD
$8.5 billion, and under the initiative announced
today, could expand to approximately USD $16
billion during the next five years, including
significant increases in materials procurement,
and increases in education, Cisco Capital,
research and development, direct and indirect
investments and sales and service operations.
- A Memorandum of Understanding with China
Development Bank to explore a joint investment
program that would provide capital and expertise
for innovative Chinese businesses. The
initiative is intended to support high-growth
Chinese companies over multiple sectors, with a
focus on information technology, "green"
innovators, and other key segments (see separate
announcement).
- A commitment to expansion of the Cisco
Networking Academies program in cooperation with
China's Ministry of Education to add 300
additional academies in vocational colleges
during the next three years, with a specific
focus on China's central and western provinces.
Currently, there are more than 200 Networking
Academies in 70 cities throughout China, which
have trained more than 90,000 students since
inception. The new initiatives will add the
capacity to train an additional 100,000 students
by 2010. Cisco will also donate more than USD $6
million worth of networking equipment to assist
in establishing labs in the new academies.
- A memorandum of understanding with Alibaba
Group, China's largest business-to-business
(B2B) on-line portal. Under the MOU, Cisco and
Alibaba will explore ways to jointly offer
collaboration and business management solutions
to small and medium businesses (SMBs) in China.
Under a previous agreement, Cisco will also
invest USD $17.5 million in Alibaba.com Limited,
a subsidiary of Alibaba Group, as part of its
planned initial public offering on the Hong Kong
Stock Exchange, becoming one of only eight
cornerstone investors in the listing (see
separate announcement).
- Establishment of incremental funding up to
USD $400 million for Cisco Systems Capital China
for providing financing facilities to Cisco
customers in China during the next three to five
years. Cisco Systems Capital China commenced
captive financing operations in June 2006 and
has funded USD $60 million in customer assets to
date.
- The establishment of Cisco's first global
"green" technology center to address the
increasing need for sustainable development,
energy efficiency, reduction of electronic
waste, and emission reductions inside and
outside of China. The center will also augment
existing programs underway by Cisco China's R&D
teams in the area of application specific
integrated circuits (ASIC) power efficiency
design and expand this into other product areas.
- Establishment of product and research teams
to develop innovative networking equipment to
address the SMB (small and medium business)
market and emerging countries markets,
leveraging local design and manufacturing
resources" (newsroom.cisco.com).
TheLowDown Newsletter
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