15 November 2007 | Andy Allen
Cisco Systems is to invest more than $16 billion (£7.7 billion) in China over the next five years, with procurement spending likely to account for most of the money.
The sum will almost double the firm's spend in the country up to 2012. Cisco declined to specify exactly how the money would be spent, but John Chambers, CEO and chairman, said a significant increase in local purchasing will form a major part of Cisco's investment.
Thomas Lam, president of Cisco China, said procurement is likely to account for "70 to 80 per cent" of the total investment. The technology firm has spent $7 billion (£3.3 billion) on China-sourced services and components in the past five years.
A company spokesman told SM
: "Our initiative in China underscores the country's strategic importance to Cisco's global operations and the broad range of growth opportunities presented by the China market."
When questioned about recent concerns over the quality of Chinese suppliers he said the company will test new products and conduct regular, unannounced audits of partner manufacturing processes and facilities.
The firm's supply chain operations in China provide employment to 50,000 people and it said it is probable that more staff will be recruited in the country.
It also plans to invest $17.5 million (£8.4 million) in the Chinese online marketplace Alibaba to sell internet services and software to SMEs.
The firm is also to invest $100 million (£48 million) in Indian enterprises.