GE's China Head Expects Strong Order Growth, Despite Slowing Economy

By Kathy Chu 

General Electric Co.'s China head expects the company to continue posting double-digit order growth in the country despite a slowing economy and a government anticorruption campaign that has delayed approvals for large-scale projects.

"In the short term, the country is going through some adjustments," said Rachel Duan, who became GE's chief executive for greater China in July, the first female or China-born native to hold this position. "We really don't see that as a longer-term or macro problem."

In the third quarter, China's economy expanded at its slowest pace in five years as the country battled a slumping real-estate market and weak domestic demand. Meanwhile, Beijing's widening crackdown on corruption has consumed local government resources and slowed project approvals.

GE employs 18,000 people in China, with some of its fastest growth coming from its health-care, energy and aviation businesses. While the conglomerate is seeing delays on some projects it is bidding for in China, particularly in the energy and health-care sector, GE expects these to have only a short-term impact on its operations, said Ms. Duan.

"We are very positive and enthusiastic about what the country is doing" in rooting out corruption because it levels the playing field for all companies, Ms. Duan said.

The executive also believes the conglomerate is well-positioned to capture the growth of China's swelling middle class despite headwinds facing China's economy.

"The direction the new administration is taking the country is the right one," she said. The government is "trading the speed of growth for the quality of growth, shifting to more consumer-oriented growth."

While China is seen as a promising growth opportunity for GE, the country has also been challenging. The government's requirement that foreign businesses partner with domestic companies means that it takes longer for ventures to be put together and to mature, GE executives have said.

GE had targeted $10 billion in revenue in China from key business units including health care, energy and aviation by 2010, but was just halfway there as of 2012, the company has said.

GE doesn't regularly break out its China revenue. But the company said that in the latest third quarter, orders across GE's business units grew 26% in China.

China "is more of a micro story than macro story now" for companies in the right industries, GE Chief Executive Jeffrey Immelt said during the company's earnings call last month. Mr. Immelt said that for companies in industries such as aviation and health care, growth is "very robust."

Write to Kathy Chu at [e-mail]

Access Investor Kit for General Electric Co.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US3696041033