June 17, 2015 / 3:45 PM / in 2 years

U.S. tech firm Cisco to invest $10 billion in China expansion

BEIJING (Reuters) - Cisco CSCO.O plans to invest more than $10 billion in China along with local business partners over the next several years, the U.S. network equipment maker said on Wednesday, as it seeks to shore up its position against strong domestic rivals.

A visitor walks past a Cisco advertising panel at the Mobile World Congress in Barcelona February 27, 2014. REUTERS/Albert Gea

Cisco, the world’s biggest maker of switching equipment and routers that run the Internet, announced the investment plans following high-level meetings between top executives and Chinese Vice Premier Wang Yang and other government agency leaders.

A statement issued by the Silicon Valley company provided the broad outlines of how it planned to invest but did not detail any specific spending or timelines for doing so.

It said in a statement it had signed a Memorandum of Understanding (MoU) with China’s state planner, the National Development and Reform Commission, to expand investment.

This will be used to fund innovation, equity investment, research and development and job creation, Cisco said.

It also signed an MoU with the Association of Universities (Colleges) of Applied Science (AUAS) to advance technical training of information and communications engineers.

The company said it will invest in a four-year network engineer training program with 100 universities and colleges of applied science recommended by AUAS.

Cisco is looking to capitalize on initiatives promoted by the Chinese government including “China Manufacturing 2025”, “Internet+” and its strategy to deliver more services as cloud-based Internet services.

The move comes as pressure has grown on foreign technology firms in the world’s biggest Internet market as Beijing has moved to promote domestic technology suppliers it says are needed to protect state secrets and data.

Earlier this year, a Reuters analysis found Cisco was among U.S. technology firms which had been dropped from state procurement lists in recent years.

Cisco and arch-rival Huawei Technologies [HWT.UL] of China have been battling each other for a decade. Political controversies over ties to their respective governments have raised questions about their futures on each other’s lucrative home turf.

In 2013, John Chambers, Cisco’s long-serving chairman and chief executive, acknowledged that security controversies had stymied the company’s moves to expand in China.

Chambers took part in the recent meetings with Chinese government officials along with CEO-Designate Chuck Robbins, who is scheduled to take over as chief executive in July. Chambers will remain as executive chairman of the company.

Additional reporting by Eric Auchard in Frankfurt, editing by David Evans

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