Cisco Systems, the world's largest maker of
equipment to link computers and direct Internet traffic, is putting its faith in
networking services and advanced technologies to drive business growth in China.
The US firm's services business is already seeing robust growth in China
according to Cisco's China president, Thomas Lam.
This includes consulting and networking services to help customers create and
integrate operational strategies, reduce operational costs and achieve optimal
network performance.
For the 2006 fiscal year ended on July 29, Cisco's services business in China
grew 38 per cent year-on-year, said Lam.
Cisco in May established a wholly owned services entity, Cisco Systems
(China) Information Technical Service Co Ltd, as part of its bid to tap into
China's services market.
"The establishment of the entity has improved our flexibility in providing
services to customers," said Lam.
Prior to the launch of the new subsidiary, Cisco provided services to its
customers in China via its local partners.
Network equipment such as routers and switches remains Cisco's core business.
A push into the services business could help the US technology giant
diversify its portfolio and better ward off rivals focusing on low-price
strategies in the network equipment market.
According to research firm IDC, China's information technology services
market will grow 18.5 per cent annually within three years.
Cisco is also gaining momentum in the so-called advanced technology market,
according to James Kuo, general manager of Cisco Systems (China) Information
Technology Services Ltd.
Cisco lists wireless, optical, home networking, storage area networks,
unified communications and security as advanced technologies that promise huge
potential.
Globally, in the fourth quarter of the 2006 fiscal year, Cisco's revenue from
sales of routers and switches grew 12 per cent and 8 per cent year-on-year
respectively.
Revenue from advanced technologies grew 23 per cent during the period. In
China, the figure stood at 48 per cent for the full fiscal year 2006.
Lam noted that sales of advanced technologies still account for a small
portion of Cisco's total revenue in China, an indication that this emerging
market promises much untapped potential.
Cisco's total sales in the 2006 fiscal year recorded the fastest growth rate
since 2002, with much growth coming from operators and the enterprise market,
Lam said, without giving a specific figure.
But Cisco President and Chief Executive Officer John Chambers said on
Wednesday, while announcing the financial results for 2006, that orders in China
saw robust growth.
"Asia-Pacific and China again had solid quarters with year-over-year order
growth of approximately 20 per cent and 40 per cent respectively," said
Chambers.
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