Cisco Systems Inc. Chief Financial Officer Scott Herren on Wednesday described his frustration with so-called gray markets that have reportedly shipped the company’s tech gear into Russia despite the networking giant’s exit from the country.
In gray markets, products are purchased outside of a manufacturer’s authorized distribution channels. The Wall Street Journal reported this week that Cisco
hardware has entered Russia via a network of vendors in areas such as Turkey and Asia that have not been authorized by Cisco and are beyond the reach of U.S. enforcement.
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“I find that frustrating,” Herren told MarketWatch in an interview Wednesday. “We paused business in Russia early on [in March 2022], and shut it down completely in June 2022.”
Herren explained that Cisco has put restrictions on resellers, and expects to take more action.
“We will take action against offending resellers to the extent in which we can find out who they are,” he said. “It is disappointing that this is still happening.”
Information purportedly extracted from a Russian customs database last year and shared with MarketWatch appeared to show that Cisco products had entered Russia from a number of countries, with the majority of shipments coming from China. Other countries of origin include Vietnam, Switzerland, Mexico, Malaysia, Australia, Thailand and the Netherlands, as well as the U.S., according to the data.
Related: Cisco gear is being shipped into Russia from China and other countries, leaked customs database shows
In the wake of Russia’s invasion of Ukraine in February 2022, a host of major U.S. corporations, including Cisco, ended their Russian operations. Cisco announced last March that it was halting all business operations in Russia as well as Belarus “for the foreseeable future.” In a subsequent statement, released on June 23, Cisco announced its decision to begin “an orderly wind-down” of its business in those two countries.
Cisco has already highlighted the challenges posed by gray markets. “Combatting gray-market operations is a challenge facing the entire technology industry,” a spokesperson told MarketWatch last year. “Cisco’s Brand Protection team continues to actively counter gray-market operators and their activities around the world.”
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The company’s stock rose 2.8% in the extended session Wednesday, after Cisco reported a second-quarter revenue and earnings beat and raised its guidance for the rest of the year. Shares have declined 10.7% in the past year, as the S&P 500 index
has declined 7.2%.
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