GE sees business windfall with Beijing Olympics
With work at Beijing's National Stadium, athletic fields, subways and international airport among other projects, Fairfield-based GE is pulling in $500 million in China to prepare for the Summer Olympics, strengthening its foothold in a market critically important to the international conglomerate's global strategy. The company has more than 300 projects related to the Beijing Olympics, which will begin next August.
GE, which will also televise the Olympics through its subsidiary, NBC, hopes the work will help boost the company's sales in China to $10 billion by 2010.
"What started as an NBC relationship has become a total company relationship," said John G. Rice, vice chairman of GE and president and chief executive of its infrastructure business. "We're trying to get all aspects of the company involved."
Much of GE's work in and around Beijing, fire detection and security systems in Beijing's subways, baggage screening at Beijing Capital International Airport and power distribution, will remain long after the games end.
"It's tremendous brand recognition," Rice said. "We become a much more significant player and much more well known."
The Beijing Olympics gives GE a chance to showcase itself not only in China, but in other emerging markets looking to build infrastructure, some analysts say.
"They want to get the name recognition out there for sure, make themselves a trusted go-to name in a lot of these areas," said Mark Demos, portfolio manager at Fifth Third Asset Management in Minneapolis. "It's a huge opportunity in China. The opportunity is there. It's a matter of who sells the stuff," he said.
GE has been a player at previous Olympics, most recently providing power for the three Olympic villages and the broadcast center at Torino, Italy, in 2006. Its work in China, however, far outreaches previous efforts as it fits with the company's strategy of expanding into emerging markets.
GE has been working to boost the company's profitability by shedding slow-growth businesses, such as its plastics division, and expand into growing markets like China, India, southeast Asia, the Middle East, Africa and Latin America.
Profits at GE were $9.9 billion for the first half of the year, up by about 6 percent over the first six months of 2006. Shares of GE, which have traded in a 52-week range of between $32.20 and $40.98, closed at $38.13 on Friday.
GE earned $30 billion in emerging markets last year, with half of its profits coming from infrastructure, which manufactures big-ticket products for aviation, energy, oil and gas, transportation and water and process technologies.
The infrastructure business is a moneymaker for GE, bringing in $47.4 billion in 2006, about 30 percent of GE's revenue.
GE hopes to capitalize on its Olympics experience, moving on projects such as power and water plants and security systems for the Shanghai World Expo and Asian Games in Guangzhou, both in 2010, and in Macao where casino construction is bringing in gambling revenue that rivals Las Vegas.
"That's kind of the beauty of this," said James D. Fisher, president and chief executive of GE's consumer and industrial business in China. "The whole idea was to get good at the Olympics, what products we need to localize."
Fisher has been in China for more than five years and, with a staff of 100, builds and outfits stadiums, commercial buildings, energy and water projects and transportation such as airports and subways.
"The concept is that GE has many different businesses and we pull people from consumer, industrial, security, water, all businesses," he said. "It's one-stop shopping for the customer."
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