General Electric execs highlight China opportunities (GE)

On June 28th General Electric (ticker: GE) held its GE Growth in Emerging Markets Analyst Meeting. Here are a number of key observations about China from various GE executives:

John Rice - President and CEO, GE Energy

Water scarcity:

....water scarcity is an issue....

Steve Schneider - President and CEO, GE Asia Pacific

Middle class opportunity:

....enormous population that's not the important thing; it's more the opportunity, the middle-classes....cities are extremely large and they are getting larger.

Migration to the east:

....one of the things that happened in China is there is a migration from the central....into the cities like Shanghai, Beijing, Fujian, Kwang Zao (Guangzhou) area, as well as Shum Shing, which is there a long the Yatzi (Yangtze) river, about 31 million people.

East dominates GDP:

....majority of the GDP is on the eastern part....where the industries are located, that's where multinationals are located, that's where the exports are.

Industrial growth in Central China:

....there's been a strategic drive to the central part (of China) that I think is going to be a much slower process than perhaps then moving up into the northeastern part.

2008 Olympics:

....the Beijing Olympic Committee we are very heavily entrenched in helping them to build their infrastructure.

Transition to a global power:

....I personally view the transition that China is going through from a low-cost manufacturer to a global market here. They are leading technology, they are leading margin and they are trying to figure out how to take this as global as they can as quickly as they can.

(Quotes are from the CCBN StreetEvents transcript.)

Other key takeaways from the analyst meeting:

• Number of Chinese airports is expected to grow from 80+ today to 170 in the near future.
• 42 airports currently under construction.
• Number of aircraft has grown from 552 to about 700 over last 3 years.
• GE has about 60% of the market share of flying aircraft in China today.
• Aircraft engines continue to do extremely well in China.
• GE sees opportunities for infrastructure, industrial, health care and financial services.
• Energy, water, health care, ageing population are major issues.
• WSJ recently reported that the ageing population will be about 140 million people by 2017.
• That will grow to about 280 million people over the next 25-30 years.
• Winning the Ching Hau railway line project was a major win for GE.
• The Ministry of Rail is investing $11 billion in new tracks in 2005.
• That number should grow to $17 billion by 2007.
• The Chinese move freight by rail for much of the trade that exists. It also uses rail to bring raw materials from the north and from the west to the manufacturing sites.

GE chart.

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