US networking giant Cisco is reported to be shaping up to cull several senior executives in China following poor sales as Beijing offers contracts to local rivals on mounting national security concerns.
The move chimes with incoming CEO Chuck Robbins' vision of a leaner organizational structure which will be able to make decisions faster and more decisively, according to a Wall Street Journal report.
Earlier this month he apparently offloaded three president-level execs from senior management, for example.
Cisco China president, Hahn Tu, and Greater China vice president, Fredy Cheung, are amongst those slated to leave, although Greater China president, Owen Chan, is set to stay, “people briefed on the matter” told the newspaper.
The news follows poor performance by Cisco in China, which saw sales drop 20% year-on-year in the fiscal third quarter, while globally they rose just over 5%.
In the router market things are also going pretty badly, with market share falling to just 9.4% in the first quarter compared with 21.2% a year previous, the report claimed, citing Bernstein Research stats.
It has been argued that this sizeable drop off in sales is due to the Chinese government’s apprehension over US technology following revelations last year that the NSA had a program of inserting backdoors into US-made routers before export.
Whether true or not, the documents made public by Edward Snowden have given Beijing a perfect excuse to wean itself off foreign technology and promote home-grown players – which in the networking space means local hero Huawei.
But Forrester analyst, Charlie Dai, told Infosecurity by email that while the Snowden revelations have triggered the government and state-owned enterprises to make changes, this isn’t the whole story.
“The increasing strength of local vendors, such as Huawei and H3C – before HP acquired and resold it – is a major factor, from both a technology and marketing perspective,” he argued.
“We also haven’t seen any major pivot from either a marketing strategy or ecosystem rebuild perspective from Cisco China. In contrast, IBM and HP have been proactively strengthening local partnerships to help transform themselves.”
Cisco declined to comment on this story.