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Cisco starts leasing, finance branch in China

By Li Weitao (China Daily)
Updated: 2006-11-10 09:08

Cisco Systems, the world's biggest maker of computer-networking equipment, launched a new subsidiary in China to provide finance and leasing services to its customers.

The subsidiary, called Cisco Capital China, will provide comprehensive mid- to long-term finance and leasing solutions to its customers. This will help clients better manage cash flow, conserve capital expenditure and improve asset management throughout the network investment cycle, the company said.

The launch of Cisco Capital China, fully owned by Cisco, reflects ongoing industry deregulation after China's accession into the World Trade Organization.

Previously, when a foreign company sought to provide financing and leasing services in China, it had to work through a joint venture with a Chinese partner that had registered capital of no less than US$20 million.

The foreign company's stake was not permitted to exceed 80 per cent.

The Ministry of Commerce (MOFCOM) last March revised the regulation, lowering the registered capital to US$10 million and allowing foreign companies to establish fully owned finance and leasing subsidiaries.

Cisco, which makes routers and switches directing most of the Internet traffic in the world, is one of the first foreign companies to secure licences for finance and leasing services since MOFCOM issued the new guidelines.

The US firm is the only network equipment maker to provide such services in China.

"The launch of Cisco Capital China will help us become more flexible when serving our customers in China," said Thomas Lam, president of Cisco Systems China in an interview with China Daily. "That will also help create customer demand (for Cisco's network gear)."

That could bode well for Chinese companies, the vast majority of which are small and medium-sized enterprises (SMEs) with limited budgets when placing orders for network equipment.

Gaining financing and leasing services from companies such as Cisco could also help firms, especially telecom carriers and banks, avoid risks when upgrading their network assets to improve productivity and maintain the upper hand against competitors.

For many companies, "they don't want to own the technology. They just want to use the technology," said Dan Brotman, director of Cisco Systems Capital, a wholly owned Cisco subsidiary since 1996 with more than US$2.2 billion in assets.