Cisco sales rise strongly in Greater China
Network equipment maker Cisco said its second-half sales in Hong Kong grew more than 35 per cent from a year earlier as companies replaced old equipment, and businesses such as the Mandarin Oriental hotel bought gear to offer new services to customers.
'Growth in Hong Kong was in the high 30s [per cent],' chief financial officer Dennis Powell said in a teleconference after the company's results announcement last week.
Sale orders from the booming banking and finance sector were at a record high, while orders from other sectors, such as logistics, supply chain, trading and transport, were better than expected, said Charleston Sin Chiu-shun, the general manager of Cisco Hong Kong and Macau.
'This is the best year we have had,' Mr Sin said.
The increased sales were partly due to the replacement cycle, with companies buying new routers and switches to replace the old ones. New applications also drove Cisco's sales.
'Sales from IP (internet protocol) phones increased 70 per cent from last year, as companies integrated their business processes with the phones,' said Mr Sin.
IP phones operate over the internet rather than traditional telephone networks. They have computing capability, which allows businesses such as hotels and banks to use them as miniature computer terminals for customers and staff.
The Mandarin Oriental recently replaced the phones in its guest rooms with internet protocol devices.
'The new phones allow hotel guests to access concierge services, book tickets, check information and so forth in their own languages. The phones also allow the hotel maids to perform their daily tasks during check-ins and check-outs,' said Mr Sin.
The uptake of Web 2.0, or interactive internet services, also encourages telecommunications operators to improve their networks as people increasingly turn to viewing video content online, said Mr Sin.
Sales growth in Macau was even more impressive, climbing 100 per cent as new casinos opened. Macau's sales still stand at about one-tenth of those in Hong Kong.
The mainland - US-based Cisco's fifth-largest single market - grew in the mid-20 per cent range, Mr Powell said.
'Those network infrastructure products - routers and switches - continue to be critical for Chinese customers as they enhance their basic network infrastructure,' said Cisco China president Thomas Lam Zheng-gang.
'We've seen early signs of the influence of the Web 2.0 trend in the mainland. It's now changing the way business is done,' he said. 'The influence of Web 2.0 is emerging but it's not yet a mainstream trend. We are still at a very early stage. The YouTube type of success has not yet developed in China but it will.
'For the next few years, the influence of Web 2.0 and collaboration will increase. And the number of internet users in China just continues to accelerate,' said Mr Lam.
Mr Powell said the introduction of 3G mobile services in the mainland, expected within the next year, would further boost Cisco's mainland sales, as the country's telecommunications operators buy more access points and core routing products.
Cisco increased its share of the mainland's routing and switching market by six percentage points to 48 per cent in the first quarter of this year, according to market researcher IDC.
The country is Cisco's single largest market in the Asia-Pacific region.
