General Electric Co, the world's largest conglomerate, wants to invest in China's financial sector and capitalize on the country's thirst for electricity, Chief Executive Jeff Immelt said on Thursday.
The U.S. titan is focusing on finance and power generation amid weakness in traditional industrial businesses such as plastics. Its emphasis on finance sets GE apart from European conglomerate Siemens AG, which has made more inroads in China with its mobile phone business.
"I would like to see in the next one, two or three years GE making an investment in financial services in China," Immelt said at the opening of a $64 million GE technology research center in China's financial stronghold. "It's a very important market for us, especially consumer finance and commercial finance."
Immelt also saw opportunities in power generation -- a growth area in a country where a booming economy and a searingly hot summer led to regional electricity shortages this year.
"This is the fastest-growing economy in the world. If we don't do it here, we're going to fall behind in terms of development and the competition," Immelt told reporters before the opening, which starred traditional lion dancers to bring good luck to the new venture.
GE, which set up its first light bulb factory in China in 1908, expects to book $3 billion in sales there this year, Immelt said. GE's Chinese business is growing at an annual clip of 30 percent and is on track to rack up $5 billion in sales and $5 billion in procurement by 2005, he added.
Yet GE's China sales lag Siemens's annual Chinese revenues of about 3.6 billion euros ($4.25 billion). Siemens derives five percent of its projected annual sales of 75 billion euros from China, compared with two percent of GE's estimated 2003 revenue of $133 billion, which is bigger than Ireland's economy.
"GE can't afford not to be in China in a big way," said Richard Steinberg, a U.S. fund manager and president of Steinberg Global Asset Management, which holds more than 200,000 GE shares.
FINANCE IS KING
Since taking the reins at GE from Jack Welch in 2001, Immelt has reshaped the conglomerate's financial arm by injecting more capital and buying lending divisions from Conseco Inc, Abbey National Plc and ABB Ltd.
The company's GE Capital arm, which specializes in business and consumer finance and has $425 billion in assets, is a profit spinner for the Fairfield, Connecticut-based firm. GE has said financial services would account for nearly half its 2003 profit.
China restricts foreign investment in its financial services industry, which is flush with $1.2 trillion in savings, but it has said it would allow foreign banks full access by late 2006 under commitments to the World Trade Organization.
"These opportunities are still unfolding, and the WTO accession will make that more obvious and apparent," Immelt said.
In one of the first moves to liberalize the sector, China issued laws allowing non-bank institutions to set up car financing firms -- a move auto makers such as General Motors are expected to pounce on.
CONGLOMERATE RIVALRY
GE rival Siemens has long had a more visible presence in China, largely due to a cellular handset business that accounts for more than half of its sales there.
The German firm also built, as part of a consortium, Shanghai's show-piece high-speed train, which can travel at 430 kph (270 mph) using a magnetic cushion rather than wheels, racing past GE's new research facility.
Unlike Siemens, GE has shied away from joint ventures, preferring to go it alone -- a rare move in the Chinese business world where connections, or "guanxi," are all important.
"If you are an exceptionally strong player in an industry, like GE is with jet engines for instance, you can go it alone," said David Wolf, a Beijing-based consultant at Burson-Marsteller.
"GE has chosen its bets well in China but in terms of sheer overall size and coverage Siemens has the edge. GE is a legend in the West, but that legend hasn't permeated here yet," Wolf added.
POWER OPPORTUNITIES
China's economy is growing faster than seven percent a year, creating power shortages, and analysts say China faces a power shortfall in the next three years despite increased capacity after the giant Three Gorges Dam came on line earlier this year.
"Does China have enough power equipment manufacturing capability to cater for this? The jury's out but I think it's probably not sufficient. So China could be a good market for GE and its rivals," said Joseph Jacobelli, an analyst at Merrill Lynch in Hong Kong. "China hasn't been shy of buying equipment from overseas companies in the past."
GE already signed a deal worth US$900 billion earlier this year to supply gas turbines to five Chinese power companies.
The U.S. titan is focusing on finance and power generation amid weakness in traditional industrial businesses such as plastics. Its emphasis on finance sets GE apart from European conglomerate Siemens AG, which has made more inroads in China with its mobile phone business.
"I would like to see in the next one, two or three years GE making an investment in financial services in China," Immelt said at the opening of a $64 million GE technology research center in China's financial stronghold. "It's a very important market for us, especially consumer finance and commercial finance."
Immelt also saw opportunities in power generation -- a growth area in a country where a booming economy and a searingly hot summer led to regional electricity shortages this year.
"This is the fastest-growing economy in the world. If we don't do it here, we're going to fall behind in terms of development and the competition," Immelt told reporters before the opening, which starred traditional lion dancers to bring good luck to the new venture.
GE, which set up its first light bulb factory in China in 1908, expects to book $3 billion in sales there this year, Immelt said. GE's Chinese business is growing at an annual clip of 30 percent and is on track to rack up $5 billion in sales and $5 billion in procurement by 2005, he added.
Yet GE's China sales lag Siemens's annual Chinese revenues of about 3.6 billion euros ($4.25 billion). Siemens derives five percent of its projected annual sales of 75 billion euros from China, compared with two percent of GE's estimated 2003 revenue of $133 billion, which is bigger than Ireland's economy.
"GE can't afford not to be in China in a big way," said Richard Steinberg, a U.S. fund manager and president of Steinberg Global Asset Management, which holds more than 200,000 GE shares.
FINANCE IS KING
Since taking the reins at GE from Jack Welch in 2001, Immelt has reshaped the conglomerate's financial arm by injecting more capital and buying lending divisions from Conseco Inc, Abbey National Plc and ABB Ltd.
The company's GE Capital arm, which specializes in business and consumer finance and has $425 billion in assets, is a profit spinner for the Fairfield, Connecticut-based firm. GE has said financial services would account for nearly half its 2003 profit.
China restricts foreign investment in its financial services industry, which is flush with $1.2 trillion in savings, but it has said it would allow foreign banks full access by late 2006 under commitments to the World Trade Organization.
"These opportunities are still unfolding, and the WTO accession will make that more obvious and apparent," Immelt said.
In one of the first moves to liberalize the sector, China issued laws allowing non-bank institutions to set up car financing firms -- a move auto makers such as General Motors are expected to pounce on.
CONGLOMERATE RIVALRY
GE rival Siemens has long had a more visible presence in China, largely due to a cellular handset business that accounts for more than half of its sales there.
The German firm also built, as part of a consortium, Shanghai's show-piece high-speed train, which can travel at 430 kph (270 mph) using a magnetic cushion rather than wheels, racing past GE's new research facility.
Unlike Siemens, GE has shied away from joint ventures, preferring to go it alone -- a rare move in the Chinese business world where connections, or "guanxi," are all important.
"If you are an exceptionally strong player in an industry, like GE is with jet engines for instance, you can go it alone," said David Wolf, a Beijing-based consultant at Burson-Marsteller.
"GE has chosen its bets well in China but in terms of sheer overall size and coverage Siemens has the edge. GE is a legend in the West, but that legend hasn't permeated here yet," Wolf added.
POWER OPPORTUNITIES
China's economy is growing faster than seven percent a year, creating power shortages, and analysts say China faces a power shortfall in the next three years despite increased capacity after the giant Three Gorges Dam came on line earlier this year.
"Does China have enough power equipment manufacturing capability to cater for this? The jury's out but I think it's probably not sufficient. So China could be a good market for GE and its rivals," said Joseph Jacobelli, an analyst at Merrill Lynch in Hong Kong. "China hasn't been shy of buying equipment from overseas companies in the past."
GE already signed a deal worth US$900 billion earlier this year to supply gas turbines to five Chinese power companies.
3287.99
1275.09
