The given code snippet looks OK. I will suggest you check the "Cascading DropDownLists" demo part of the examples bundled with the Kendo UI Complete for ASP.NET MVC. You can find it %Install Folder%/ProgramFiles[x86]/Kendo UI for ASP.NET MVC/Examples. It shows how to implement the required functionality. If the problem still persist I will need a repro project in order to investigate the issue locally and advice you further.
All the best,
the Telerik team
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