Cisco CEO Talks China & HP/3Com

SAN JOSE, Calif. (TheStreet) -- Cisco(CSCO) CEO John Chambers predicts that Chinese firms will revolutionize the tech sector within the next decade, and plans to increase his company's foothold in the world's fastest-growing major economy accordingly.

Speaking during the company's annual shareholder meeting on Thursday, Chambers was quizzed about Hewlett-Packard(HPQ)'s shock $2.7 billion acquisition of rival 3Com(COMS), which already has a significant presence in China.

"Fast forward ten years, the top competition in the world will be in China," he said, in response to a shareholder's question. Some 600,000 engineers graduate in China every year, ten times the U.S. number, he added.

In 2007 Cisco announced a $16 billion multiyear investment in China, which included a stake in Chinese giant Alibaba.com and Chambers explained he will not take his eyes off the booming Chinese technology market.

"The Chinese are going to be a very good market for us," he said. "We can't ignore markets, we must play there, compete there."

The ebullient Cisco chief even hinted that his firm had been approached about a potential 3Com purchase. "We get offered to buy almost anyone [considered an acquisition target] in the world,", he explained.

On the whole, Chambers was diplomatic on the subject of H-P, which was bought by 3Com largely to challenge Cisco in its own backyard of networking equipment. Cisco stepped on H-P's toes earlier this year when it entered the server market, signaling all-out war between the two companies.

"H-P is a wonderful company, they helped us more when Cisco got started than any other company," said Chambers, politely adding that his firm has since undergone a metamorphosis. "We don't sell boxes any more, we combine servers with networking with storage -- we sell business process change."