The business relationship between Cisco and Chinese electric car companies has been a topic of interest recently. Ming Wong, Vice President and CEO of Cisco Greater China, expressed optimism about the company’s growing business with Chinese electric car companies as they expand overseas. Cisco’s presence in the electric vehicle (EV) segment in China is significant, with most of its revenue coming from manufacturing companies, particularly in the electric car category.
Chinese EV-makers have increased their global expansion efforts in response to heightened domestic competition. However, trade tensions have posed challenges, with the U.S. and potentially the European Union imposing tariffs on Chinese electric car imports. Despite these obstacles, Chinese automakers like BYD are investing in local factories to sustain their growth. Cisco is actively collaborating with at least 10 electric car customers as they establish factories, offices, and research and development centers overseas.
It remains uncertain how much spending will be generated by these international business expansions. Shiv Shivaraman, an expert at consulting firm AlixPartners, anticipates manufacturing and office-related capital expenditures to increase, potentially accelerated by tariffs. The evolving geopolitical landscape, such as the U.S.-China trade war, has impacted Cisco’s operations in China. CEO Chuck Robbins acknowledged the challenges faced by the company, citing a significant decline in revenue in the country. However, Wong remains hopeful that Cisco’s China business can return to growth, emphasizing the shift in focus towards both state-owned and non-state-owned businesses expanding globally.
Chinese internet companies like Alibaba are also playing a role in supporting Cisco’s business growth by expanding globally. Cisco’s ability to connect various graphics processing unit providers in a market where Nvidia faces restrictions has positioned the company strategically. Graphics processing units are crucial in powering the training and implementation of advanced artificial intelligence models. Despite a 13% decline in total revenue in Cisco’s latest quarterly report, with the Asia-Pacific, Japan, and China region experiencing a 12% revenue drop, Wong remains optimistic about the region’s growth potential in the coming years. He highlighted Asia Pacific as the highest growth area for Cisco.
The collaboration between Cisco and Chinese electric car companies represents a complex interplay of opportunities and challenges. While trade tensions and geopolitical uncertainties pose obstacles, Cisco’s strategic focus on expanding partnerships with global businesses and leveraging technological capabilities positions the company for future growth. By adapting to market dynamics and building resilient relationships with key industry players, Cisco can navigate the evolving landscape of the electric vehicle industry in China and beyond.