– GE Moves 115-Year-Old X-Ray Unit’s Base to China to Tap Growth (Bloomberg, July 25, 2011):
General Electric Co. (GE)’s health-care unit, the world’s biggest maker of medical-imaging machines, is moving the headquarters of its 115-year-old X-ray business to Beijing to tap growth in China.
“A handful” of top managers will move to the Chinese capital and there won’t be any job cuts, Anne LeGrand, vice president and general manager of X-ray for GE Healthcare, said in an interview. The headquarters will move from Waukesha, Wisconsin, amid a broader parent-company plan to invest about $2 billion across China, including opening six “customer innovation” and development centers.
The move follows the introduction earlier this year of GE Healthcare’s “Spring Wind” initiative to develop and distribute medical products and services in China, GE said in a statement today. More than 20 percent of the X-ray unit’s new products will be developed in China, LeGrand said.
The division should have “double-digit” growth rates as the country converts from film and analog to digital X-ray technology, LeGrand said. “When you look at a market like China, it’s primarily analog. So we feel this will also bring digital technology at an appropriate price-point.”
GE Healthcare, also the world’s biggest maker of magnetic resonance imaging and cardiac tomography scanners, got about $1.1 billion of its $16.9 billion in sales from China last year. Health-care device markets are forecast to more than double this year, according to researcher Epsicom.
GE’s increasing focus on the Chinese market will heighten competition for local suppliers, such as Shenzhen-based Mindray Medical International Ltd. (MR), according to Johnson Sun, a health- care analyst at Guotai Junan Securities HK Ltd. in Hong Kong.
“This will mean more intense competition for Mindray in China especially at the lower-end, primary-care market where growth potential is strong because of government reforms,” Sun said in a telephone interview. That part of the market is attracting interest from foreign companies such as GE and Siemens AG (SIE), he said.
Mindray Medical is China’s biggest seller of medical devices by sales. Its American depositary receipts fell 0.8 percent to $26.95 at the 4 p.m. close of New York Stock Exchange composite trading on July 22.
The X-ray business, whose financial results aren’t reported separately by GE, will hire 65 new engineers and support staff at a new Chengdu facility, the company said in the statement. GE has hired “a large number” of engineers who are in training, LeGrand said. GE, based in Fairfield, Connecticut, also has a global research center in Shanghai.
“Over the next five years, China will be GE Healthcare’s most important growth market,” Rachel Duan, the China unit’s president and chief executive officer, said in Beijing.
The company wants to keep its leading position in providing medical devices targeted at higher-end Chinese customers, and also break into China’s growing market for primary health care, a key goal of the Chinese government’s health-care reform plans.
To do that, GE Healthcare plans to boost China-based research, enabling it to introduce at least 20 products for the local market during the next three years, Duan said. Of those products, 70 percent will be used in primary care, such as by a general practitioner or family doctor. The company is targeting doubling production capacity in China in five years, she said.
About 60,000 people work at GE Healthcare globally, including 820 in the X-ray business, said Benjamin Fox, a company spokesman. Of health-care employees, more than 5,000 are in China, including about 2,000 sales representatives, Duan said.