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SAN JOSE – 11/23/07 – Network gear maker Cisco Systems Inc. unveiled a multi-year, $16 billion expansion in China with investments in manufacturing, venture capital, and education.

"We're going to the next chapter for Cisco in China," John Chambers, Cisco's chief executive, said at a news conference.

The ventures include an agreement with the Alibaba Group, China's biggest online commerce company, to explore developing business services for small and medium-size companies, Chambers said.

Other initiatives include doubling Cisco's manufacturing in China over the next three to five years, a possible $100 million venture capital partnership with a government bank and more support for technology education.

The company says its manufacturing and purchasing in China already support some 50,000 jobs.

Cisco, based in San Jose, is the world's largest network equipment maker, with more than 61,500 employees and $34.9 billion in revenue in the latest fiscal year.

China has the world's second-largest population of web users after the US with 162 million people online.

Cisco has been criticized by activists who say it sells Beijing equipment that might be used in official efforts to monitor and control Internet use.

Chambers defended Cisco's dealings in China, saying it does not provide "unique capabilities" to any government, including that of the US.

"I think if you really look at the capabilities of the Internet, it will weigh in many, many positive ways," Chambers said. "And will there be some disadvantages along the way? The answer is yes. But the overall benefits are so positive," he said.

"Secondly, one thing tech companies cannot do, in my opinion, is involve themselves in politics in a country," he added.

Cisco and Alibaba, Yahoo Inc.'s local partner, agreed to explore cooperating on Web-based business services for small and medium-size companies and expanding Alibaba's overseas market, the companies said.

Chambers and Alibaba founder Jack Ma watched as executives of their companies signed a memorandum of understanding on the venture.

"We feel Cisco without a doubt is our most important partner for growth," said Ma. "We are looking at a long-term partnership – five years, 10 years or even longer."

Earlier this year, Cisco agreed to invest $17 million in Alibaba as part of the Chinese company's planned initial public offering in Hong Kong that is expected to raise up to $1.5 billion. Alibaba has said it will use the money to expand abroad.

Silicon Valley-based Cisco has also unveiled the details of two other projects in China.

The company and the government-owned China Development Bank will explore jointly providing capital and expertise for Chinese businesses in fields including information technology, health care and communications.

In addition, Cisco will partner with China's Education Ministry to open 300 centers at vocational colleges to train students in networking technologies, adding to 200 centers already operating that have taught some 90,000 people.

The company said it will donate equipment worth $6 million to the project.

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