GE beefs up presence in Chengdu and Xian

General Electric is taking Beijing's 'Go West' campaign seriously, and has added to its facilities in the cities of Chengdu and Xian. Chief executive Jeff Immelt says the US conglomerate is optimistic about growth prospects in the world's second-largest economy.

GE yesterday opened its first 'innovation centre' in Chengdu, in Sichuan province, and said it was setting up a second innovation centre in Xian, in Shaanxi province, this summer, as it positions itself closer to the high-growth western regions.

'We chose Chengdu because it's a great gateway to China's west,' Immelt said yesterday. 'The future in China will be innovation, not just low-cost manufacturing.'

The 33,000 square metre innovation centre, built with an investment of US$80 million, was part of GE's US$2 billion commitment in 2010 to boost innovation and build up technology partnerships in China over three years.

It will focus on research into tailor-made medical equipment for China's rural areas, equipment to tap mainland shale gas reserves and energy storage applications for the country's transport sector.

Beijing has accelerated infrastructure construction and rolled out incentives to attract foreign investment in its formerly underdeveloped west.

GE is revving up expansion in growth markets, including China, after its sales in the United States, its largest market, dropped 7.1 per cent last year. In China, GE recorded annualised business growth of about 20 per cent in the past year.

'My preference would be steady and consistent growth over a long period of time,' Immelt said. 'I'd prefer to build a business that way, rather than [be] more volatile and speculative.'

GE is among a group of multinationals that are moving to tap the potential of China's west.

In 2009, Intel, the world's largest chipmaker, spearheaded the move among Western corporate giants to relocate its assembly and testing facilities to Chengdu from Shanghai.

GE has made a series of massive investments in China recently to consolidate its foothold in the fast-growing market.

Last month, it announced it would buy a 15 per cent stake in China XD Electric Group for 3.38 billion yuan (HK$4.14 billion) and planned to set up a 50-50 gasification joint venture with Shenhua Group, the mainland's largest coal producer.

Immelt said GE was establishing two or three more joint ventures in China, without providing details.

'The goal now in China is to localise, make the products simpler, and make the products more suited for Chinese development,' the chief executive said.

The Xian facility due to open in summer will focus on research in lighting and coal, Immelt said.