US technology giant Cisco Systems yesterday opened a research and development (R&D) center in Shanghai as part of its intensifying investment activities in the world's most dynamic telecoms market.

The Cisco China R&D center, with a committed investment of US$32 million over five years, will focus on R&D for voice and related applications for telecom service providers.

The move confirms a trend that global technology giants are transferring R&D activities to China to tap into the country's vast engineering pool and to meet surging demand from local customers.

Cisco, the word's top maker of Internet equipment such as routers and switches, already has five R&D centers in the United States, the United Kingdom, Canada, Israel and India.

Charles Giancarlo, chief development officer of Cisco, said he hoped to develop the China R&D center into "a center of engineering excellence" and one of the top four global R&D facilities for the company in the future.

Cisco has long planned the opening of the China R&D facility, but it was delayed due to the downturn in the Internet economy worldwide in 2000-01, he noted.

But with the R&D center now in place, Cisco expects to be better positioned to respond to the specific demands of the local market.

Giancarlo said the center, which will initially recruit about 100 local engineers, will also develop products for the global market.

He added that Cisco will aggressively increase R&D activities in China and continue to invest in the country.

Global technology giants have long been using China as a major manufacturing base and as a sales market. But in recent years they have established facilities focusing on R&D, the lifeblood of technology companies.

The opening of Cisco China R&D Center marks a major change in Cisco's investment strategy in China.

Since its entry into China more than 10 years ago, Cisco has invested a total of US$600 million in start-ups in the technology sector, partly by partnering with venture capitalists.

Such start-ups include NASDAQ-listed Shanda Interactive Entertainment, the biggest Chinese online game operator.

Since 1998, Cisco has established 216 networking academies across China to develop Chinese knowledge and skills for networking and Internet technologies.

It has also promised to invest US$37.7 million, partnered with China's Ministry of Education, to establish 35 model software colleges to foster Chinese software engineers.

Voice-related technologies, including Internet telephony, a fad in the industry, will be the key area for Cisco's investment activities in China in the coming years, said Giancarlo.

The Cisco China R&D Center will also develop networking solutions for home users and small and medium-sized businesses, which are emerging as a major customer for Cisco.

The firm in 2003 acquired Linksys Group Inc, the global leader in home networking market, for US$500 million.

Giancarlo, also president of the Linksys subsidiary, said Cisco is not as established yet in China's home networking market as it is in other business areas such as the router and switch markets. "I hope we will be (dominant in the home networking space) soon," he said.

(China Daily October 13, 2005)