Cisco Systems Inc., a U.S. technology giant, is eyeing to announce a deal with startup Chinese server maker Inspur Group Co. as part of its move to strengthen its struggling business.
Chuck Robbins, Cisco's CEO since July, said that "there are certain geopolitical dynamics that [they] have to navigate."
On Wednesday, Chinese President Xi Jinping met with major technology-industry figures such as Apple Inc.'s Tim Cook and Microsoft Corp.'s Satya Nadella. The presence of the tech firm executives highlights the importance of the Chinese market to U.S. companies.
Tech powerhouses such as Microsoft, Symantec Corp. and International Business Machines Corp. who were once leaders in the Chinese market were seen running up against homegrown rivals for the past years.
During the past two years, this situation has deepened as allegations have surfaced that the foreign firms' products are being used by the American government to spy on China.
The trend of foreign firms partnering with Chinese counterparts has been on the rise as a response to this business chill.
However, the China headwinds have gone strong specifically for Cisco, the world's no. 1 seller of routers, key network plumbing and switching systems.
Though the company, founded in 1984, did not provide sales figures, market research firm Dell'Oro Group estimates that the revenue of the U.S. firm climaxed at $2.04 billion in 2012 and has dwindled by nearly 30 percent since then.
As a countermeasure, Cisco is turning its focus to seal a deal with the rapidly growing Inspur, where Shandong State-Owned Assets Investment Holdings Co. has a controlling stake.
According to people familiar with the talks, the companies are eyeing to let Inspur resell Cisco's networking gear. The two firms are also planning to jointly develop hardware.