Cisco chairman promises 'win-win' deal with China over network control

DUBAI (Reuters) - Cisco’s CSCO.O executive chairman on Monday declined to say whether it would cede to China’s demands to be able to control equipment deployed in the world’s largest internet market, instead pledging to find a “win-win” solution.

A visitor walks past a Cisco advertising panel as she looks at her mobile phone at the Mobile World Congress in Barcelona February 27, 2014. REUTERS/Albert Gea

The world’s top maker of switching equipment and routers that run the Internet has a bet big on China, announcing in June it would invest more than $10 billion in the country along with local business partners.

Cisco’s commitment comes despite unease among foreign business groups over a China national security law adopted in July demanding all key network infrastructure and information systems be “secure and controllable”.

“We will find a way to make it a win-win situation,” executive chairman John Chambers told Reuters on the sidelines of a news conference in Dubai.

Foreign firms warn China’s new law is vaguely worded and could require technology firms to manufacture products in China or release source code to inspectors, thereby exposing intellectual property.

“We give our source code to no one,” Chambers told the conference when asked if Cisco would give China a written promise that it would comply with government demands, declining to directly answer the question.

“We spent three years winning the trust of the Chinese government and if you watch most American companies, their businesses in China is down dramatically, so was ours for several years. Do you know how much we grew in China last quarter? Forty percent.”

Foreign technology firms have been increasingly squeezed out of China, the world’s biggest Internet market, as Beijing seeks to promote domestic technology suppliers it says are needed to protect state secrets and data.

Earlier this year, a Reuters analysis found Cisco was among U.S. technology firms that had been dropped from state procurement lists in recent years.

“There are legitimate needs of all government in terms of the issues of terrorism and national security,” added Chambers.

“I think you have to disclose when you’re gathering information on people and if you do it right on a trust basis, even with some of the countries of the world that might surprise you, you can find a true partnership basis.”

Reporting by Matt Smith; Editing by Jonathan Weber and Cynthia Osterman