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Cisco resurgence in China to require time, patience: CEO Chambers

Chairman of the Board and CEO of Cisco John Chambers speaks at the Global Investment Conference 2012 in London July 26, 2012. REUTERS/Neil H
Chairman of the Board and CEO of Cisco John Chambers speaks at the Global Investment Conference 2012 in London July 26, 2012. REUTERS/Neil H

By Sinead Carew and Nicola Leske

NEW YORK (Reuters) - Cisco Systems Chief Executive John Chambers said on Thursday that the network equipment company is preparing for a long battle to improve its business in China, one that will not be won "in a quarter or two."

The company's revenue in China fell by 18 percent in the quarter ended in October, a major contributor to a 21 percent decline in the company's top five emerging markets.

Cisco said on November 13 that a backlash against U.S. government spying in China contributed to its declining revenue, after a former U.S. spy agency contractor Edward Snowden exposed widespread surveillance - in particular through Internet data, much of which is transmitted via Cisco equipment.

It said that the spying scandal, which involved multiple countries, was not a significant issue for Cisco outside of China.

Chambers said Cisco is "in China for the long run," but he was reluctant to offer much detail on how the company plans to improve its business in the country, where China-based rival Huawei Technologies Co Ltd has been gaining a lot of ground.

"You have to be very patient and you have to work the issues through and you have to keep the conversations that you have at all levels confidential because otherwise you won't have any more," Chambers told reporters after the company's financial analyst conference in New York.

Chambers repeated a previous comment he had made in China, that he would love to be Chinese if he were not American. He was also quick to distance himself from any collaboration with the U.S. government to win back business in China.

"We're not asking help from any government leaders," he said. Instead Cisco head of sales Chuck Robbins will travel to China every quarter and Chambers himself as well as Rob Lloyd, president of development and sales, will take turns visiting China to help improve relationships. Chambers also said Owen Chang, Cisco's chief executive of greater China, has the patience needed to help improve the company's business there.

Cisco's efforts in China "will be a series of quiet moves," rather than something that would be quickly noticeable, said Chambers. He said that "the Chinese send messages very subtly. Who sits beside who at a table, who you meet when you go to China, who you don't meet ... And do you do joint ventures or not, what key market opportunities do you have."

"It's a slowly evolving area. Its an area I'm personally very comfortable with," he said. "I've been there 28 years so I know the culture and the leaders."

Chambers said it would be in the best interests of the United States and China for their companies in technology and other sectors to work together.

"In many ways I think our countries have goals that are more aligned than adversarial," he said.

However, Cisco has had a bitter rivalry with China's Huawei for years, starting with a patent-infringement lawsuit brought by Cisco about a decade ago.

Chambers would not say if he thought Cisco's difficulties in China came in retaliation after the U.S. government effectively banned the sale of Huawei's equipment here last year.

"I think there is a focus on China national pride and using indigenous innovation and their own technology companies. I think it's more along that line. Huawei has done a good job marketing over there," Chambers said.

(Reporting by Sinead Carew and Nicola Leske; Editing by Steve Orlofsky)

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