Cisco Announces Multi-Billion-Dollar China Investment

Cisco Announces Multi-Billion-Dollar China Investment

China is apparently the new frontier and Cisco wants a bigger piece of it.

The networking equipment manufacturer could spend as much as $16 billion on a multi-year initiative announced Thursday. The strategy includes the company's first green technology center dedicated to sustainable development, energy efficiency, electronic waste reduction and emissions reductions both in and out of China.

The move signals the beginning of Cisco's next chapter in China, a country in which the company began significantly investing 13 years ago.

"Today's announcements underscore both China's strategic importance to Cisco's global operations and the broad range of growth opportunities presented by the China market, particularly as an innovator in the next wave of the Internet's development in collaboration and Web 2.0 technologies," said Cisco Chairman and CEO John Chambers.

Cisco will invest $17.5 million in Alibaba.com, China’s largest business-to-business online portal. The partnership will devise business management solutions for small and medium Chinese businesses. Cisco also will create product and research teams to develop networking equipment to address the small to medium-sized business market, as well as emerging countries markets.

During the last five years, Cisco has bought more than $7 billion in Chinese components and services as part of its virtual manufacturing supply chain. That figure under Thursday’s initiative is expected to significantly increase.

The company signed a memorandum of understanding with China Development Bank to investigate the viability of a joint investment program to finance and advise innovative, high-growth Chinese businesses, with an emphasis on those in the areas of information technology and green technology.

Cisco established $400 million in incremental funding for Cisco Systems Capital China to offer financing to Cisco customers in China during the next three to five years. Cisco Systems Capital China has already funded $60 million in customer assets to date.

Cisco also will expand its Networking Academies program with China’s Ministry of Education to add 300 academies in vocational colleges during the next three years. There are now more than 200 Networking Academies in 70 Chinese cities that have trained more than 90,000 students. Thursday’s initiative will more than double that capacity by 2010.