GE Invests $2B In China

General Electric plans to sink more than $2 billion into China through 2012 and add more than 1,000 jobs as part of the conglomerate’s efforts to build partnerships in the Far East.

GE says it will likely spend $500 million on research and development and new customer innovation centers, all of which will generate jobs.

More than $1.5 billion is expected to be put toward new joint ventures with Chinese state-owned enterprises in high-technology sectors, according to the Associated Press.

What’s In It For America?

WMB sees numerous benefits in terms of improving our global stance in relation to China, a nation whose trade and economic policies have a great influence on U.S. companies, among them rebounding automakers General Motors and Ford.

GE, which began business in China in 1906, wants to keep pace with the country’s fast growth, perhaps the greatest of any nation on the planet right now.

Chairman and CEO Jeff Immelt, who recently traveled to India with President Obama seeking work for U.S. businesses, says China is the world's fastest-growing market for aviation, energy, transportation, health care and financial services.

GE, based in Fairfield, CT, has 36 wholly-owned entities and joint ventures in China in manufacturing, service and R&D. It has 14,000 workers in China.

GE says the new customer innovation centers, which will be built in six cities, will be used to better serve the west, north, central and south China markets.

Among the cities under consideration for centers include Chengdu, Shenyang and Xian. The new facilities will work closely with existing R&D operations in Shanghai, Beijing and Wuxi.

The centers will concentrate on product development, engineering for applications, sourcing support and delivery in development areas such as rural health care, renewable and clean energy, smart grid, energy-efficient lighting, rail and aviation.

“These commitments represent GE's confidence in China's long-term economic prospects,” says Mark Norbom, president and CEO of GE Greater China.

GE, which operates in more than 100 countries and has 300,000 employees globally, will team with a group of Chinese businesses to accomplish the company’s investment objectives.

GE's Efforts Make Sense

We, at WMB, applaud GE’s forward-thinking approach to expanding its global reach through mutually beneficial partnerships with China, the world’s most populous nation, which also hosts the dynamic economic center of Hong Kong, a special administrative region.

From a political standpoint, the planet benefits from a tighter the bond between global capitalist enterprises and the world’s largest communist system.

The more exposed China’s leaders are to outside influences, the greater the chance for openness and changes to emerge as younger generations rise to prominence within the national party.

New, progressive thinking and cultural exchanges blossom naturally when working relationships are developed between economic rivals and military adversaries.

From an economic standpoint, the United States stands to gain a more equal partnership in terms of trade with another economic giant. WMB firmly believes China and America need each other to prosper, despite differences in political and social systems.

Sure, there are big issues that divide China and the United States, most notably in human rights, but we have to recognize and appreciate the fact that our two nations, arguably, are the two most dominant players on the world stage right now.

China and America have the financial, political and environmental power to shape the planet’s future. As WMB sees it, a partnership based on these three areas works in both countries’ interests.

Solutions to national and world problems need not be complicated. Since the most direct path between two objects is a straight line, expanding business partnerships between China and America just makes good sense.

As for me, I practice what I preach at writenowworks.com. If you like this post, please share it.

ChinaWatch: Ford Expands

We Mean Business offers the latest installment in our new feature, ChinaWatch, our digest of selected industry and consumer news from the world’s other major economic and military power.

Poised To Surpass U.S.?

“China’s per capita income may be among the 100 poorest nations, but these are still the early years of its opening-up” on the world economic stage, The China Daily reports.

“The fact is that China’s economic modernization is surpassing in decades what developed nations took centuries to achieve,’’ according to the paper.

“The world’s two largest economies, the U.S. and China, currently have GDPs of $15 trillion and $5 trillion, respectively. However, China saves and invests 35 percent of GDP, but Americans consume more than they produce.’’

The China Daily asserts U.S. policymakers are not aligning their country’s interest with China’s economic success, even though major American companies are in China to be profitable.

“Will the U.S. align its success with China’s or are the two countries changing places? The answer depends on many factors, but the Obama Administration’s current policies assure failure. What he needs is a new grand strategy for success. ’’

Stock Fraud Hits $30B

Fraudsters in the Chinese stock markets have proved to be as active as those in India, The Times of India reports.

China’s ministry of public security has revealed that the total sum involved in securities and futures markets crossed $30 billion since 2002.

Investigators have managed to recover just $4.5 billion of the total money stolen. Police have cracked 150 major crimes, including the prominent case of Huang Gangyu, former chairman of the electronic retail chain Gome, now serving a prison sentence of 14 years.

The Beijing No. 2 Intermediate People's Court confiscated $30 million worth of Huang's assets and fined him $90 million for insider trading and illegal business dealings.

The ministry accepts that China's capital market is still in an “early and transition” stage, and various systematic problems might have given way to some illegal activities. The country's stock market begun operating as late as 1990 in the financial hubs of Shanghai and Shenzhen.

The Chinese government recently introduced a slew of measures that include regulating government officials, who have access to insider and non-public information about listed companies, and ensuring confidentiality of sensitive information.

Ford Expanding Dealerships

Ford Motor Co. plans to add 66 dealerships in China before the end of the year, according to a Ford document reviewed by the Wall Street Journal.

The one-fourth expansion of Ford's China sales effort will focus on what are considered the tier-two and tier-three cities in Western and Northern China.

In all, Ford will have added approximately 100 new dealerships in China with its partner, Changan Automobile, by the end of the year.

The total number of Ford dealerships in China will be roughly 340 by year-end, according to the Ford statement reviewed by the WSJ.

The tier-two and tier-three cities in China include Nanning, Shijazhuang, Harbin and Anyang, cities with populations over one million. Car demand isn't the only consumer trend being tapped in the Chinese tier-two and tier-three cities.

It's part of a much larger trend in China, from education to health care and real estate, as the tier-one cities become saturated, according to TheStreet.com.

No Motor Madness In Detroit

It’s been a long time since American automakers had something to rev their engines about, but that could be changing with some recent announcements by the Big Three.

General Motors and Chrysler plan to renovate plants and restore jobs in efforts aimed at building a new generation of automobiles. Even Ford will invest nearly a billion dollars in four plants in a bet that the nation’s slow recovery will eventually mean more demand by consumers.

These ambitious plans demonstrate the Big Three have shifted gears in an attempt to move forward and leave the dismal sales of the recession years in the rear view mirror.

After years of downsizing and reorganizations, Detroit’s moves have buoyed hopes that the upper Midwest can reverse years of high employment and economic decline. Here’s the latest from the automakers:

Chrysler

The smallest automaker of the Big Three is now controlled by Fiat. The firm said it will invest $600 million in its Belvidere, Ill., plant to prepare for building new vehicles there in 2012. This spending and new vehicle production will spare 2,349 local workers whose jobs are scheduled to end soon with the product lines.

The plant now makes Dodge Caliber compact sedans and Jeep Compass as well as Patriot small crossovers. Chrysler did not say what new vehicles it will make, but speculation has centered on Chrysler-branded products based on Fiat and Alfa Romeo vehicles from Italy.

General Motors Corp.

The Lansing Grand River plant will add 600 jobs and a second shift following GM’s investment of $150 million to produce a new small Cadillac. This car will be a compact and less expensive than the CTS line already made at that plant in Michigan’s capital city.

Ford Motor Co.

The only one of Detroit’s Big Three not to go through bankruptcy court and take government money says it will invest $850 million into Michigan plants through 2013. This will add an additional 1,200 jobs, according to a Ford spokesman.

The spending will be spread over several plants including Van Dyke Transmission, Dearborn Truck, Sterling Axle and Livonia Transmission.

In September, Michigan’s unemployment rate was 13 percent, second only to Nevada. Ohio’s employment also was particularly high because of the downturn in auto manufacturing. America’s Rust Belt has felt a larger sting from the Great Recession than many other areas.

As part of their expansion, the Big Three are investing more into making small cars in the United States rather than in South Korea or Mexico, a reversal of previous trends.

The reasons are based on wage and benefits concessions, bringing down labor costs significantly. However, it also means new jobs will pay less than jobs that have been lost.

“They are at the point where they can profitably produce a smaller vehicle,” says Dave Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. “A lot of assets scrubbed from the books aren’t a liability anymore.”

GM, in particular, dumped unprofitable product lines including Pontiac (after 80-plus years, including a great run in sports/muscle cars), Hummer, Saab and Saturn.

The updated plants will be able to produce a wider variety of vehicles, so if sales fall in one category, the plants can raise production in others.

WMB believes the jury is still out on these latest moves.

Although they are to be commended for their efforts, the Big Three’s modernization may be too late for market conditions when compared to Japanese, German, and yes, upcoming Chinese rivals.

It’s not only about production efficiency but technology as well. Moves to migrate from the internal combustion engine to hybrid fuel cells will increasingly be driven by consumers. Function, price and design must be part of the successful equation.

Politicians also need to get on-board to better position the Big Three to battle in a global market. American automakers lost their edge to foreign competition before, so it’s essential that mistake not be repeated.


We do have the chance to get it right this time if there is a coordinated, well-thought effort combined with creativity – a driving force behind some of the best and innovative auto designs from Detroit auto engineers in the 1950s and 1960s.

This post is from TechMan, WMB co-author who blogs about trends, issues and ideas affecting business, industry, technology and consumers. Please share this post!

Companies: Surviving To Thriving

Times are tough and, no matter what business you’re in, companies are struggling to keep the doors open through the “Great Recession.”

Fortune 500 companies and small start-ups alike are grappling with the worldwide slowdown that has shrunk payrolls and profits since late 2007.

Despite adverse conditions, some companies are not just surviving but thriving. We at WMB take a look at six of these high performers:

1. Amazon (NASDAQ: AMZN)

Amazon literally began in a garage, similar to how many large corporations started in this country. Amazon’s founder, Jeff Bezos believed the Internet could meet consumers’ needs in a different way. He began shipping books to his customers worldwide in 1995. His vision and sales plan proved to be profitable.

Amazon has grown to be the first place most shoppers go to when placing an order for a book. The company grew sales by 28% last year, even though 2009 was a tough year of deep sales declines for most companies and businesses throughout the world.

The company’s secret was to focus on the long term. Amazon plans to develop new products such as its Kindle 3. The firm plans to expand its market share and is always looking toward its next move.

2. Ford (NYSE:F)

Not too many years ago, the company founded by industrialist and inventor Henry Ford was in deep financial trouble, along with the rest of the American auto makers. The industry was plagued with recalls, safety issues and declining sales. It even looked like Ford might fail until CEO Alan Mulally took over the helm.
It took three years of losses, deep cuts in jobs and expenses, but Ford posted a $2.7 billion net income in 2009. The company also recently announced second quarter profits for April through June of $2.6 billion. Additionally, the company expects to end 2011 with less debt than cash. This is an amazing success story compared to a few years ago.

A complete overhaul, eliminating models from its line, cutting costs and revamping its image got Ford Motor Co. back in the game during a time when competitors, such as General Motors Corp., were on the verge of bankruptcy.

3. Domino’s (NYSE:DPZ)

It’s not easy to admit your product lacks appeal on national television, but Domino’s Pizza did just that. Motivated by a consumer survey (with video clips on TV), the company overhauled the recipe of its pizza, proving that change is good for business.

Under the new marketing change and new recipe, profit more than doubled in the fourth quarter of 2009, increasing sales for that quarter by $23.6 million. People must still like to eat.

The secret to Domino’s turnaround was novelty. The company changed the self-proclaimed cardboard crust and ketchup sauce to a new, improved pizza that brought people in the door.

Time will tell if they can sustain sales but, for now, the pizza giant has turned this new product into a financial success.

4. Snuggie

This company is a surprise success story. How many people would have believed this product would take off the way it did? Snuggie has been called a robe you put on backwards by “Tonight Show” host Jay Leno.

It has been parodied all over TV, but the Snuggie was undoubtedly last Christmas’ hit. The blanket with sleeves was purchased by more than 20 million people during 2009. While sales are not readily available, the product has turned out to be recession resistant.

The one thing we all did last year to save money was take fewer trips. While we were at home many of us turned the heat down and watched TV. The Snuggie is proof that novelty, the right price, and timing can translate into big bucks.

5. Intel (NYSE:INTC)

Intel last year recorded a profit of $2.89 billion; much higher than expected! Intel sat tight during the recession while client companies held off on computer purchases for their employees.

Now, the company is seeing an upswing, with profits soaring to a 10-year high. Intel’s secret to success is simply patience. By waiting for pent-up demand to return, it’s back to raking in cash.

6. Lego

Last year was a tough year for almost all toy companies, except for Lego. During 2009, when most companies were holding tight to ride out the recession, Lego’s profits soared 63 percent. With the toy market stagnant in the United States, Lego expanded to Asia and increased its sales in Europe.

A recent boost to Lego’s cash flow came when soccer star David Beckham admitted he was building a Lego Taj Mahal during his downtime; sales soared 663 percent! This proves celebrity endorsement can influence consumer buying more than other factors and boost profit dramatically.

The Bottom Line

The Great Recession in many ways may not be over, but it prodded corporate giants to think outside the box to not only survive but better position their company for future growth.

The companies profiled above demonstrate that with patience, innovation and an occasional dramatic change, you can overcome a deep recession and see profit even when competitors face extinction. And, of course, a well-placed celebrity endorsement doesn’t hurt either.

This post is from TechMan, WMB co-author who blogs about trends, issues and ideas affecting business, industry, technology and consumers. If you like this post, please share it with family, friends and colleagues!