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Cisco pessimistic about Asian networking market growth

Cisco pessimistic about Asian networking market growth

Cisco does not expect to see any growth in its overall Asian market for the next two years, a leading company executive said this week.

Of particular concern to Cisco is the Japanese market, while business in China remains strong, said Bill Nuti, vice president, Greater Asia at Cisco.

"It's gotten everyone in Asia from the business perspective acting somewhat more conservatively. The biggest concern so far is Japan." Nuti noted that what happens in the Japanese economy will have a "wide ranging" effect on what will happen in Asian countries as a whole in the next year or two.

However, the situation for Cisco in Asia is not all gloom and doom, with the company experiencing what Nuti terms "very substantive growth" in China, Hong Kong and Taiwan year on year for fiscal 1998, particularly in China, which is now one of the vendor's top 10 largest revenue producing countries. Other bright spots in Asia for Cisco are Singapore and India, both of which markets continue to grow at very rapid rates, he added.

Hovering on the horizon, although, is the spectre of China's mooted devaluation of its currency, the renminbi. Nuti said that Cisco has tried to factor such an occurrence into its future plans, although he added: "It's difficult to build any economic or political profile into business plans."

With financial analysts estimating a potential renminbi devaluation at anywhere between 5 per cent and 25 per cent, Nuti said that a devaluation near the low-end was unlikely to affect Cisco much, leaving other questions to be pondered. "If it does devalue, will China continue to invest in telecoms?" he asked. "Will that help or hurt us? I don't know."

As for which country will recover first from the ravages wrought by the Asian economic flu, Nuti is backing South Korea and Thailand. "I do believe that South Korea will pull out first," he said. "They are the 13th largest economy in the world and have been entrenched in the economic crisis for as long as some of South Asian countries. I also think Thailand will be a very close second or right there with South Korea in a tie."


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