Cisco establishes $80M pact with TCL to target China cloud opportunities

Cisco has created an $80 million joint venture with Chinese hardware vendor TCL to establish a foothold in the country's cloud services market.

According to a stock exchange filing TCL made on Thursday, Cisco will invest $16 million in the new company, which has not been named and is still being registered.

Cisco will also hold a 20 percent stake in the firm, while TCL will pay $64 million and hold the remaining 80 percent share.

China has become a hotbed for cloud service activity with various cloud providers establishing a presence in the country.

Following the lead of Amazon (NASDAQ: AMZN), IBM and Microsoft (NASDAQ: MSFT), CenturyLink (NYSE: CTL) recently established its own managed hosting and cloud presence in China via a partnership with Citic Telecom, GDS, and Neusoft, for example. Their movement into China is being driven initially by U.S.-based multinational corporations (MNCs) that want to extend their presence in China.

Targeting a mix of small and medium sized businesses (SMBs), Cisco and TCL said they would build new data centers in China and establish cloud-based video communication and collaborative office systems.

Under the proposed company structure TCL, through an affiliate, will name four company directors, while Cisco will name one. This affiliate will also be charged with putting together the new venture's management team.

China is just one of several countries where Cisco is looking to be a key cloud player.

In September, the vendor announced a separate $1 billion investment to expand its Intercloud offering, which includes linking to over 30 partner cloud providers' data centers.

For more:
- Reuters has this article
- ZDnet has this article

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