However this deal is typical of a growing number of tie-ups between Chinese and United States technology firms which are part of a cunning plan to get government regulators off the backs of the big multi-nationals.
Cisco Systems Inc said Thursday it would form a joint venture with Chinese server maker Inspur to sell networking and cloud computing products in the Chinese mainland, where the Silicon Valley firm faces political pressure and declining sales.
Cisco signed a “strategic cooperation framework agreement” during a US tech industry meeting with President Xi in Seattle, Robbins announced in a blog post this week.
Robbins said he was “thrilled” to make the announcement while Xi presided over the eighth China-U.S. Internet Industry Forum, and is hopeful that it will improve Cisco’s revenue in China. “Today, China represents approximately 3 percent of our business, and being the world’s second-largest economy, we see the potential to increase this considerably over time”, he wrote. It is also unclear to what extent the slowdown in other Chinese industries will affect its nascent high-tech sector, observers note.
Cisco’s sales in China have suffered in recent years, and were hit hard by the revelations of former U.S. National Security Agency employee Edward Snowden of NSA spying on other countries, including China, with the alleged help of USA tech companies.
China is a key market for USA tech companies, giving China considerable bargaining power. The upgrade reportedly included thousands of Cisco routers. “There are certain geopolitical dynamics that we have to navigate”, said Chuck Robbins, who became Cisco’s chief executive in July, in a recent interview in which he didn’t discuss Inspur. This week’s joint venture deal includes reselling networking equipment and joint development of networking hardware and software. Cisco’s effort to open more doors for its technology in China shows how Western tech companies are scrambling to adjust to an increasingly tough market. Inspur is a much smaller company.
Last year, Inspur proposed to have joint venture with IBM, but the matter was dropped down.