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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 percent 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 percent 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 percent and 8 percent year-on-year respectively.

 

Revenue from advanced technologies grew 23 percent during the period. In China, the figure stood at 48 percent 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 percent and 40 percent respectively," said Chambers.

 

(China Daily August 10, 2006)