"We Need to Be More Chinese than the Chinese": Interview with GE CEO "Nani" Beccalli-Falco

To execs like Ferdinando "Nani" Becalli-Falco, President and CEO of GE International, China looks like a gold mine. But is it a green mine? As the clean tech industry in the the People's Republic of Greenhouse Gases grows to be the world's biggest, GE stands to make a big profit while helping the country get cleaner across the range of sectors in which it specializes. Eco- was the major prefix at the GE pavilion at the Olympic Green in Beijing, which focused on the five elements and GE's associated green technologies: water (desalination), fire (florescent lighting), metal (cleaner airplane engines and hybrid locomotive technology), wood (wind power), and earth (energy generation, including what it now calls "cleaner coal"). Even if the latter technology remains mostly a smokestack dream, GE's other green-minded products and services -- not just on the industrial level but on increasingly on the consumer front as well -- will be a growing part of its continued push in the Middle Kingdom and in other developing countries.

Despite current financial troubles for the company, GE predicts $10 billion in revenues in China in 2010, up from $5.4 billion in 2006. Worldwide, it says revenues from its range of energy-efficient and environmentally friendly products and services will surge 21 per cent to $17 billion in 2008, while GE's annual investment in cleaner research and development will pass $1.4 billion.

What does China mean to GE, and what does GE's growth here have to do with innovation and sustainability?

China for us is 5 billion dollars in sales, coming from 1 billion in 2000, going to 10, possibly 11 in 2011, so it's a curve that goes like this. We changed our strategy in China, and this is related to the sustainability factor. We used to be an importer into China of products that were designed in other parts of the world. This allowed us to get to certain level. And then the curve has flattened. In order to be able to continue to grow we need to be more Chinese than than the Chinese.

That means creating products that are designed locally for the local market. Products that are designed in Milwaukee in the US have got all the bells and whistles you can imagine. They are complex, top technology. But they may not be working in a country which is mostly farmland like China. Or India. So we've been beefing up our research center in Shanghai. Today we have about 1600 people, and we're continuing to hire with the specific purpose to create a pool of scientists. For example, 60 percent of the manufacturing of health care products sold in China are manufactured in China. Because China is no longer the center of cheap manufacturing. It's becoming a creative technologist. My mother used to have a German refrigerator, now she has a Chinese one, a Haier. So they've begun to build products that are competitive from a technology point of view and a price point of view. So in a sense we have to be more Chinese than the Chinese.

In terms of its sustainability goals and needs, what does China represent to GE?

We have to look at China in terms of the progress that it's made in a certain period of time and the progress that it will make over a certain period of time. If you think about where China was in terms of industrial production, environment, and so on – I came to China in 1993. If you look at it right now and what it can be in the future, you have a country that is really working on the sustainability of progress, on sustainability of technology, capability of becoming a true industrial power from an economic point of view, and from the quality-of-life point of view. When you look at the way the Chinese are living today, you recognize that it's a different world than what it was just a few years ago.

This is an internal process of development that is going to drive sustainability. When you have 400 million Chinese that are also developed, that are demanding certain kinds of products, a certain kind of quality, they are not going to go backwards. As a matter of fact there are going to be more people that are going to join this group. And this market driven economy, which today is controlled in a certain way, will continue to liberalize. How long have you been in China?

Two years.

Okay. Five years ago the situation was worse than it was today. Shitty cars that were spitting smoke in your face. Furnaces in houses that were burning and puffing shit into the atmosphere. And old manufacturing facilities that were the dirtiest. Spitting lots of coal. But many of those are now shut down. They are improving and continuing to improve. They buy wind technology. They are looking for solar technology—but not yet because we're at a technological point where it's not ready yet. They buy biomass machinery. They are definitely interested in nuclear. They are interested in gas. Not only steam turbines using coal, but gas turbines, which is a cleaner burn. When you look at the things they are doing many of the right things, many of the things necessary to sustain environmental change.

Given that, and considering GE sees China as a huge market, what are the hurdles for GE? In terms of innovation, distribution, and entering the market.

I think the hurdles are us. In being able to provide certain technology in the large quantities that are needed with certain kinds of performances and so on [see this article about GE's backlog of orders for wind turbines]. Our capability to be there and be present, so the Chinese are welcoming not only us, but lots of companies. If you have the right price and the right product, there is no hurdle.

More with Nani on Page 2

Tags: Beijing | China | Olympics