General Electric to expand its digital businesses in China
General Electric announced on Wednesday plans to expand its digital businesses in China, reflecting its latest move to leverage China’s growth and the internet to combat a slowdown.
The US corporate giant was a pioneer among foreign businesses with an early foray into mainland China’s industrial internet sector, following a number of unsuccessful attempts by global cyberspace behemoths to secure a foothold in the world’s second-largest economy.
With the launch of a “digital foundry” in Shanghai, GE will fast track more than 10 digital programmes and 40 data analytic applications in China to explore the potential of the Internet of Things.
”It’s right at the starting point,” said John Rice, GE’s vice chairman. “We think that the intersection between the horizontal and vertical is the place we can play and create enormous value.”
GE’s digital projects on the mainland already cover its vertical sectors including aviation, healthcare, power and intelligent environment.
The so-called foundry in Shanghai, with an investment of US$11 million, is the second of its kind outside the US for GE. It provides incubation for local start-ups and serves as a hub for collaboration with customers to develop new applications.
Rice said GE would target both its existing clients and new customers in China where the Internet of Things market is expected to reach US$166 billion by 2020.
Internet of Things is the network of physical devices embedded with electronics, software, sensors and network connectivity that enable the objects to collect and exchange data.
Efficient use of the data and technologies could help decrease cost and boost productivity.
GE also announced it would form a tie-up with Huawei Technologies to develop smart machines amid China’s digital transformation.
The spread of the internet has had a huge impact on people’s lifestyles in China, with e-commerce and financial technologies growing by leaps and bounds.
However, global internet giants such as Google and Facebook have yet to crack open the mainland market due to Beijing’s tight grip on cyberspace.
The current Chinese leadership is strongly pushing its Internet Plus strategy as part of efforts to transition the economy into a consumption-driven one, rather than an infrastructure-focused model.
China’s economic growth slowed to a 25-year low of 6.9 per cent in 2015.
GE said it saved US$500 million in production costs this year by using the smart machines and technologies connected via the industrial internet.
The US company is envisioning wider use of industrial internet technologies such as big data and cloud computing in China at a time when Beijing is urging domestic businesses to accelerate digital transformation to cut costs and boost efficiency.
It remains to be seen whether foreign industrial internet technologies and products will be well received by China’s corporate juggernauts, most of which are state-owned and would normally operate under the government’s directives.
International companies have been increasingly complaining about Beijing’s bias against multinational firms while supporting its homegrown rivals to rev up domestic expansion and set industry standards.
“We have changed a lot in China and I am proud of it,” said Rice. “We are in all the big infrastructure projects.”
GE is also a major supplier to C919, a narrow-body airplane developed by China.