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GE looks to next 10 years

07-26-2010 15:49 BJT

SHANGHAI - As early as 1999, Chen Xiangli, who was then a researcher at GE's global research center in New York, made his view known to his bosses that they should consider China the priority over other markets, including India, in establishing overseas centers for research and development.

Apparently they listened. In 2000, Chen, an expert in laser technology with a PhD from the University of Illinois in Chicago, was dispatched to Shanghai to start up his dream shop. Celebrating the GE China Technology Center 10th anniversary last week, Chen was seen beaming with satisfaction that he was proved right.

"Our research center here has the leading technology in areas such as clean energy," Chen told China Business Weekly. "We serve customers not only in China but also in other countries around the world."

Recently, a US industrial company bought a patented industrial wastewater cleaning technology developed at GE's Shanghai center. The technology is still on trial but, if it goes well, it can be applied globally. "It (the technology) can greatly reduce the amount of polluted water discharged from factories," said Chen.

Mark Little, director of GE's Global Research, said that his company's Shanghai center had become a vital engine for GE's global development. Attending Global Enterprises Innovation in China Forum organized by GE, Little said that he expected the research center in Shanghai would "celebrate many more 10-year anniversaries".

As one of the largest and earliest independent research centers opened by an overseas company in China, GE CTC now has more than 1,400 research staff and more than 60 laboratories equipped with world-class facilities. Every year, its research teams undertake an average of more than 100 projects.

Unlike the strategy of other foreign companies' research centers in China, GE CTC does not simply adapt technology from the US to the China market. It does what Chen described as the "reverse innovation" mode, encouraging researchers to focus on what can best satisfy the specific needs of the domestic consumers.

This visionary idea became more grand when it was expanded into a "In China, For China" program in 2008 and received $15 million investment from GE headquarters. In 2009, that figure was doubled to $30 million despite the economic downturn.

In 2009, a new engine designed by GE CTC's engineering team powered China's first fully home grown commercial aircraft - the ARJ21-700. Behind that, China's appetite for aviation technology was just about to take off with its 13 percent traffic growth and a rising middle class that was largely under-served.

But aviation technology is just one small domain that GE CTC shares with the country. From clean energy including wind power, solar power, and clean coal, to water filtration technology and efficient train engines, China has become a voracious consumer of GE's green products.

"Environmental protection is always GE's main focus. We have had this "ecomagination" project, in which we have doubled our investment during the past five years, from $0.7 billion to $1.5 billion. And we are very proud that the research projects are also going up," Mark Little told Chinese Business Weekly.

Sales of products tagged with the "ecomagination" label make up about 9 percent of GE's total globally. Yet in China, "ecomagination" sales accounted for 17 percent of GE's $4.6 billion overall total in 2008, according to numbers from Business Week.

Facing increasing market competition from rivals such as Honeywell and domestic vendors such as ZTE, however, Chen admitted that speed was the biggest challenge for GE CTC to seek growth opportunities.

"The Chinese market is undergoing a rapid change that is way ahead of the world, while GE's previous successful experiences in developed countries may actually become a barrier," said Chen.

Editor:Xiong Qu |Source: China Daily

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