GE plots R&D drive in China

31 May 2012

BEIJING: General Electric, the conglomerate, is placing open innovation at the heart of its China strategy, based on the belief such an approach is essential for driving growth.

The company recently opened a new R&D hub in Chengdu, costing $80m overall, and which is to specialise in the energy and transport sectors, alongside emphasising rural healthcare.

Among the main features of this site are mock-up hospital locations like maternity wards and intensive care wings enabling customers to trial products and suggest feedback.

The ideas under consideration at present include medical appliances that are especially appropriate for conditions in the countryside, like portable ultrasound scanners and teleconferencing suites letting doctors in cities speak to patients remotely.

GE will unveil another R&D unit in Xi'an, Shaanxi province, this summer, focusing on lighting and coal. Xi'an was chosen as it means GE is closer to consumers in regions enjoying rapid growth.

Jeff Immelt, GE's chief executive, stated that the firm's latest China Innovation Centre (CIC) served as an example of how its strategy was developing in the world's most populous nation.

"We believe open innovation practices, especially the customer co-creation approach embodied in CIC Chengdu, is essential for multinational technology companies such as GE as we participate and contribute to China's future growth," he said, as reported by the Shanghai Daily.

"We expect to see steady and consistent growth in China over a period of time," he added. "Our revenue growth in China is 20% a year, which is quite substantial."

In 2010, GE announced a plan to invest $2bn in China, a key market for the organisation as the economic climate elsewhere proves challenging. Bloomberg, the information provider, estimated its US value sales fell by 7.1% last year.

According to Immelt, the firm is in the midst of finalising negotiations on two or three further joint ventures in the country, adding it was too soon to release details.

More broadly, it has named China among its core future growth markets, a group that also includes Australia and Peru. Overseas nations now yield 59% of its industrial revenues, with the aim that this figure will hit 65% by 2020.

Data sourced from Bloomberg/Shanghai Daily; additional content by Warc staff