Cisco and Inspur intend to set up a joint venture in China that will sell networking technologies and products, Cisco CEO Chuck Robbins wrote in a corporate blog. The companies will invest an initial $100 million.
In June, Cisco pledged to invest $10 billion in China to support the growth of local economies and businesses.
Cisco has been struggling in China since 2013, when Edward Snowden revealed that its routers exported to China were routinely intercepted by the U.S. National Security Agency and equipped with hidden surveillance technology.
In early 2015, China unofficially retaliated by blacklisting some big U.S. tech firms from certain approved purchase lists, including Cisco, Apple, and Citrix, reported Fortune at the time. The Silicon Valley mega-company has also been hurt by Chinese government policy that favors domestic technology companies.
To be fair, the U.S. government has implemented similar policies, suspicious of Chinese tech companies. After a 2012 U.S. congressional committee warned that Huawei and ZTE products could be used for spying, Huawei said it would give up trying to establish a U.S. presence for its telco network equipment. (That turned out to be temporary; since then, Huawei has broken into the U.S. telco market by pursuing small rural carriers.)
For Cisco, its Chinese business has lately slowed to a crawl. A Wall Street Journal blog today says two reporters who visited the new Cisco headquarters in Hangzhou this summer found the office completely empty except for a couple of receptionists.
Still, Cisco is using today’s announcement to play up the growth potential 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,” writes Robbins. “Our fiscal Q4 results in China were more encouraging than any quarter over the past two years.”