Chinese government-controlled enterprises are opting to work with local vendors rather than American-owned companies as the U.S.-China trade war continues, Cisco Systems CEO Chuck Robbins told CNBC on Thursday.
"We certainly saw an impact on our business in China this quarter. A lot of state-owned enterprises, I think where they have options, they're choosing local manufacturers," Robbins said on "Squawk on the Street." "We don't know if that's a short-term thing or a long-term thing."
Cisco shares ended Thursday down 8.6%.
Cisco shares tumbled Thursday after the California-based computer networking equipment company issued weaker-than-expected forward guidance, citing macro uncertainty. Revenue in China was down 25% on an annualized basis in its fiscal fourth quarter, Cisco Chief Financial Officer Kelly Kramer said on Wednesday's post-earnings conference call.
"While it's a small part of our business, when it falls off that precipitously, it creates a challenge," Robbins told CNBC on Thursday. "We saw strength in other parts of the business. But during July, we felt a slight change in sort of the overall macro [economic environment] versus what we'd experienced in the prior months."
If the U.S. and China were able to strike a deal to resolve their trade and technology disputes, Robbins said that he would expect "more robust access" in China.
China's foreign ministry spokesperson said on Thursday it hopes to "meet the U.S. halfway" on trade issues.
"On the basis of equality and mutual respect, we will find mutually acceptable solutions through dialogue and consultation," China's spokesperson at the foreign ministry Hua Chunying said Thursday, according to a CNBC translation.
It's a softer stance from earlier in the day, when China's State Council Tariff Committee said the Trump administration's tariffs "seriously violated" an agreement made by leaders of the two countries and would take necessary countermeasures.
Discussions between the world's two largest economies will be held in two weeks, China's Commerce Ministry confirmed.
— CNBC's Jordan Novet contributed to this report.