GE eyes greater role in China's financial market
By Xu Dashan (China Daily)
Updated: 2004-02-26 10:02

United States firm General Electric (GE) plans to expand into the financial market in China in order to build on its current success on the industrial front.

That's the purpose of a visit to China by Kathryn Cassidy, GE vice-president and treasurer.

Cassidy and her high-profile company delegation visited a number of officials from the country's major financial institutions, including the big-four State-owned banks - Bank of China, China Construction Bank, the Industrial and Commercial Bank of China, and the Agricultural Bank of China.

One aim of the GE delegation's visit is to sell as many as possible of the company's bonds, which stand at US$50-60 billion globally this year, to Chinese investors.

Asian investors, including those from China, previously bought about 5 per cent of the company's debts issued each year, Cassidy said.

"But we aim to increase the share (of the debts to Asian investors) to about 10 per cent," she said.

Cassidy's visit to China is at an opportune moment, as the nation's commercial banks plan to use some of their foreign exchange assets to buy international debts.

Bank of China Spokesman Zhu Min said last week that the bank would use part of the recent foreign exchange injection from the State US$22.5 billion to buy international debts with better-return but low risks.

Bank of China and other banks in China, which have combined foreign exchange assets of about US$205 billion, would have interests in these bonds, according to economists.

But one economist said that Cassidy's visit means more than simply trying to sell more bonds in China.

A more important purpose of the visit would be to study the possibility of gaining a foothold in the country's financial markets, said the economist.

GE has already gained a foothold in China's financial market through its involvement in the disposal of non-performing loans.

Cassidy said GE would become more involved in the business after the first deal was completed.

GE is also planning to expand its financial services, including auto financing, real estate loans and reinsurance services in China.

The nation's financial markets will be fully opened up to foreign firms under commitments made to the World Trade Organization.

GE has submitted an application to China's insurance regulatory body, the China Insurance Regulatory Commission, to allow its subsidiary, Employers Reinsurance Corp, to conduct business.

The company is also preparing to set up an auto-financing firm on China's mainland after the regulations are relaxed.

"We offer an auto financing service in almost every marketplace in the world," GE China chairman and chief executive Steve Schneider said earlier.

"And for the Chinese financial market, we are of course always looking for entrance opportunities and analyzing the market."

Schneider said the company's strategy for 2004 is to build on and accelerate the development it has notched up in the past couple of years, during which it has greatly expanded its presence in China through joint ventures and acquisitions.

"China's entry into the WTO and its commitment to market opening is providing a better environment for our growth," said Schneider.

In January 2003, GE's power systems unit made its first investment in China with the establishment of a US$14 million joint venture with Shenyang Blower Works to provide repair and maintenance services for oil and gas equipment.

GE Power Systems also took a majority stake in Kvaerner Power Equipment Co Ltd (Kvaerner Hangfa) of Hangzhou, one of the leading suppliers of hydropower generation equipment in China, the company's largest acquisition in China.

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