GE targets Chinese growth

11 November 2010

BEIJING: General Electric, the US conglomerate, will invest over $2bn (€1.5bn; £1.2bn) in China during the next two years, boosting its innovation and customer service capabilities.

"China is the world's fastest-growing market for aviation, energy, transportation, healthcare and financial services," Jeff Immelt, GE's chief executive, argued.

"The commitments we are announcing … will bring GE's technology and innovation strengths to help meet these growth challenges in China. These initiatives will create jobs in both China and the United States."

To bolster its position in the country, GE is directing $500m towards research and development, and establishing six Customer Innovation Centers, offering greater reach across northern, central and southern regions.

"Our Customer Innovation Centers will add more than 1,000 new R&D, marketing and application engineers," Immelt revealed.

Alongside working closely with GE's existing arms - operating out of Shanghai, Beijing and Wuxi - these divisions will focus on product development in sectors like rural healthcare, clean tech and green energy.

A further $1.5bn in funding has been allotted to forming joint ventures with Chinese organisations.

Such alliances include agreements with Whuan Nari, the Shanghai Electric Power Company, and the Beijing National Railways Research and Design Institute of Signal and Communications.

"The new joint ventures are in line with our strategy to build partnerships in China to support our business here and globally," Immelt said.

GE has already forged three joint ventures covering various categories, as it aims to exploit the substantial opportunities available.

"These commitments represent GE's confidence in China's long-term economic prospects," said Mark Norbom, president/ceo of GE Greater China.

"Our localisation and partnership initiatives will bring technology and expertise to China while at the same time enhancing our ability to compete in this highly competitive yet dynamic market. It is a true win-win."

Immelt has previously been outspoken when raising concerns relating to indigenous innovation programmes pursued by the Chinese government, and about protectionism.

New policies and reassurances from the authorities regarding "how welcome GE is" have proved encouraging, he said.

Other simmering issues incorporate disputes between multinationals and local firms pertaining to the exact source of technology used in China's high-speed trains, and GE intends to adopt necessary caution.

"There will be no reason for GE to take risks in those areas," said Immelt. "We would never do anything to tarnish the GE brand."

More broadly, he suggested talks with the Railways Ministry on projects in this field may enable the American company "to leverage technology from China to open up new global markets."

GE generated around $6bn in Chinese sales last year - a small share of its $157bn total - but expects "continuous" improvements from here on.

In just one example of the immense possibilities the Asian nation provides, the Chinese government has outlined plans to spend some $750bn on clean energy in the coming ten years.

"The growth in the next decade or decades that's going to take place will be quite robust in places like China and India," said Immelt.

"Globalisation is a very important aspect of long-term growth. We're in every way fortifying and continuing to drive that growth in the future."

Data sourced from General Electric/Wall Street Journal/Global Times; additional content by Warc staff