For GE's China business, 2015 is a time of peace of mind. In China's GDP growth rate reached the officially announced 6.9%, GE China's sales only increased slightly, and GE's growth target for the former is double-digit every year.
However, what affects GE is not the slowdown in China's economy, but its downturn has another reason.
The Chinese government’s two-year anti-corruption campaign has made GE’s local customers nervous, and they are afraid to participate in large-scale projects because the regulators have scrutinized these projects. Another part of GE's customers, that is oil and the health care industry is undergoing major state-owned enterprises reform and adjustment, it is difficult to make large purchases approved.
However, the impact of anti-corruption is waning. Perhaps for this reason, GE China CEO Duan Xiaoyu, who went to Hong Kong to attend the Fortune's Most Influential Women's International Summit, said in an interview: "It is foreseeable that China's situation will be better in 2016."
GE China's annual revenue is $8 billion, and Duan Xiaoyi has been CEO since 2014. She said that anti-corruption is generally good for China, but “it really makes the project decision delay.†This is very important, because “our customers are mostly state-owned enterprisesâ€, which is the focus of government supervision.
Duan Xiaoyu said that green energy is a major theme in the 13th Five-Year Plan that the Chinese government is scheduled to issue in March. China's electricity consumption accounts for one-third of the world's total. This poses a problem because 70% of China's electricity comes from coal-fired power generation companies.
“China will shift to clean energy, which is natural gas, renewable energy, and more environmentally friendly use of coal.†Duan Xiaoyu expects renewable energy and natural gas consumption to double in the next five years, while GE’s business includes wind power. , hydropower and natural gas.
Before becoming the head of GE China, Duan Xiaoyu was the president of GE Healthcare Greater China. She said that in all of GE's China operations, the outlook for the medical sector may be the brightest, even surpassing the aviation business; the latter's speed of manufacturing aircraft engines can hardly keep up with the growth in China's transportation needs.
At the results conference earlier this year, GE CEO Jeff Immelt said that GE's medical device business had passed the second year of the "difficult period."
In China, public hospitals are overcrowded. It may take a few hours for the patient to queue up for registration and a long wait to get a short-term diagnosis. In order to solve this troublesome problem, the Chinese government will develop private hospitals as a way out in the recent reforms.
Private hospitals can afford expensive medical equipment sold by GE, such as CT scanners, because they treat Chinese affluent people. For other people, the Chinese government is promoting basic medical facilities. These facilities are common in the United States and rare in China.
“In China, all large equipment sold by GE has to be publicly tendered, and anti-corruption has interrupted the bidding activity. This is different from the private sector in that it is pure commercial negotiation in the private sector.†Duan Xiaoyu analyzed this.
However, the slowdown in procurement last year created a lot of demand, and Duan Xiaowei believes that these needs will emerge this year. She said: "When you look at it, you will find that the willingness to buy is very strong."
This may not be optimistic. This may be just the status quo seen by a multinational company that is closely related to Chinese state-owned enterprises but has been injured in the two-year large-scale anti-corruption.
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