Dear valued partners
I’m pleased to share with you the news that Cisco has entered into an agreement to form a joint venture with China Electronics Software Information Service Co., Ltd, a majority-owned subsidiary of China Electronics Technology Group Corporation (CETC). A press release was sent to media outlets in China.
The new joint venture will focus on innovation and new product development to support socially-valuable solutions for smart cities and customers in China in the specific education, healthcare, transportation and energy market segments.
We are excited about reaching this major milestone in the execution of our China strategy as the new joint venture will help us enter into new horizon of transformational business opportunities in China. It will create new, open standards-based products NOT currently offered by Cisco, and use them to create innovative technology solutions for public and private projects in China.
Cisco will hold a 43% stake in the US $200 million joint venture with China Electronics Software Information Service Co., Ltd holding the remaining 57%. We will be appointing the key executives and board members within the joint venture. We have also agreed to a comprehensive plan that will serve as a model for other companies to protect the technology and intellectual property of both organizations, and ensure compliance with all governing laws. All intellectual property developed independently by the joint venture will be owned by the joint venture.
To support the establishment of the joint venture, it will, at the beginning, use its own brand to market a limited set of entry-level routers and switches currently sold by Cisco in China. In the longer term, it will focus on creating new innovative solutions and building its own brand in the target sectors.
The joint venture will be an entirely new business and will operate independently from Cisco China’s business, establishing its own operations and recruiting its own employees. It will have little direct impact on Cisco’s existing sales and partner organization. The joint venture will leverage the network of its Chinese partner to recruit channel partners to support penetration into its target market segments.
Some of the exciting areas the joint venture may focus on include developing smart connectivity devices and applications to help parents, teachers, and students in schools across China connect to the latest education material through interactive whiteboards, laptops, tablets, and other devices. It may also help doctors and nurses provide better patient care by connecting them with up-to-date information through modernized healthcare infrastructure and administration.
We have a long-standing and positive relationship with CETC - a number of its subsidiaries are Cisco’s Gold Partners. We believe this new joint venture will serve the mutual interest of both partners.
I would encourage you to reach out to your Cisco account team if you have any questions about this announcement. They are equipped with the relevant information to help you understand our strategic thinking behind.
Greater China Partner Business Group