china.bmpSan Jose’s Cisco has invested $50 million in China Communications Services (CCS), a new spin-off from China’s state-run telecom company.

CCS offers all kinds of telecom services to Chinese companies and service providers, including — surprise — digital video.

Cisco, the giant networking company, has been aggressively entering new markets, and video is one part of its strategies. Cisco is not content to settle for taking over the U.S. living-room. It sees many more living-rooms in China.

The investment in the China Telecom spin-off is Cisco’s largest investment in China to date. The move is also significant because spin-offs from Chinese government-run companies are happening at a rapid rate, and they need help getting cutting edge technology. Cisco, which is partnering with CCS, can stand to see strong growth as CCS becomes more efficient.

CCS had its IPO on Friday on the Hong Kong exchange, and the Cisco investment was part of the IPO. Other CSS shareholders include China Telecom Group, China Mobile and China Unicom.

Cisco has already returned a profit on its first $400M batch of venture investments in China beginning in 2001, Ned Hooper, Cisco VP of Corporate Business Development, told VentureBeat earlier this week. Cisco has since started investing from a second batch of funds, and its too early too tell how these investments are doing. All told, Cisco has invested more than $700 million into nearly 30 Chinese start-ups, including online learning company Ambow and gaming company Shanda.

Hooper said the CCS investment is to help spark the next wave of service provider infrastructure investment in China, which is being led by 3G (third generation telephone networks) and broadband services, including Internet TV.