9/28/2004 -- Last week, Cisco CEO John Chambers announced plans to open a $32 million R&D center in Shanghai, China.

Chambers said the center, which is expected to go live by Q3 of 2005, will employ about 100 people. The idea, he said, is that Cisco’s Shanghai R&D center will help the company better design its products for the Asian market.

In a related move, Cisco unveiled a new financing program designed for small and medium enterprise customers in Korea and kicked off a new venture capital operation in India.

Cisco isn’t the only networking stalwart to show an interest in China or the Far East, of course. In fact, notes Jeff Ogle, a principal analyst for carrier infrastructure with consultancy Current Analysis, one week before Cisco trumpeted its Chinese connection, arch-rival Juniper Networks touted a similar announcement: a global R&D center situated in Beijing and expected to open by year’s end. “Juniper’s facility will focus on network and security solutions for the small to medium businesses and was positioned as an extension of the company’s internationalization strategy for research and development that establishes R&D centers around the world,” he comments, noting that another networking competitor, Avici, has established an OEM relationship with Chinese tech giant Huawei to resell its products.

Ogle sees a number of positives in Cisco’s move, starting first and foremost with the possibility of attracting top-flight talent from the ranks of Chinese technologists. But he also questions the level of Cisco’s commitment, given the relatively modest price tag — $32 million — attached to its Shanghai investment. “It is truly not overly aggressive on Cisco’s part and could be construed as a mere token gesture to appease the Chinese Government,” he notes.

Cisco’s VC gambit in India is another story altogether, Ogle says. “The India portion of the announcement is a true venture capital operation targeted towards businesses with innovative technology that would help Cisco address unique networking needs,” he writes. “This is a different model than one of underwriting equipment sales for key customers and puts Cisco into the venture capital funding business and it is therefore potentially subject to the large financial wins and losses associated with the VC community.” -Stephen Swoyer