Friday, July 02, 2010

Signals: Immelt on PRC and Obama

Interesting. This is not the first time I've heard something like this in the last few weeks.

Jeffrey Immelt, General Electric’s chief executive, has launched a rare broadside against the Chinese government, which he accused of being increasingly hostile to foreign multinationals.

He warned that the world’s largest manufacturing company was exploring better prospects elsewhere in resource-rich countries, which did not want to be “colonised” by Chinese investors.

Companies which have operations or suppliers in PRC discovered that PRC is a risky place in which to do business long ago. Both Chrysler and Briggs & Stratton found knockoffs of their products in the marketplace within a couple of years of starting operations over there, and stories of horrific quality problems are out there (think Selig's Playground).

What IS significant is that Immelt said it out loud.

Then Immelt showed that he can read the newspaper.

Mr Immelt also had harsh words for Barack Obama, US president, lamenting what he called a “terrible” national mood and expressing concern that over-regulation in response to the global financial crisis would damp a “tepid” US economic recovery. Business did not like the US president, and the president did not like business, he said, making a point of praising Angela Merkel, Germany’s chancellor, for her defence of German industry.

“People are in a really bad mood [in the US],” Mr Immelt said.

Up to this point in time, it seemed that Immelt was pretty happy with Teh Won, and vice-versa.

Maybe Immelt's direct subordinates showed him the actual results of Bammy's doctrinaire Socialist/Statism and it ain't as pretty as Bammy's speeches??



J. Strupp said...

Maybe Immelt should consider that GE Capital would have bankrupted his entire company in a matter of months if those same Feds. hadn't backstopped the financial system a couple years back.

Tough words from a guy who was a lost puppy just 2 years ago. How quickly he forgets.

Dad29 said...

Well, GECap aside...

Immelt's comments are not inaccurate. There IS a terrible mood, and the Administration IS openly anti-business.

You can't seriously believe otherwise.

neomom said...

Its been quite a disconnect for a while. The rank and file is overwhelmingly anti-statist and has not been impressed with the Statist-butt-kissing CEO.

But its more likely about results.

Every Obami policy and regulation has hurt the GE industrial businesses. Immelt being cozy to the administration hasn't helped any of them - certainly not the biggy (Energy) or the workhorse (Healthcare). Oh - and the stock still sucks.

How long you think the BoD is going to put up with that?

I hope Immelt is finally deciding to crawl out from under the desk and start actually running the company again.

neomom said...

Oh yeah - on another note - the PRC is most certainly NOT going to open their market to non-PRC goods. They want the multi-nationals there for exactly two reasons - to employ PRC citizens and to steal IP.

And everyone outside of Fairfield knows it.

Dad29 said...

And everyone outside of Fairfield knows it.

Well, Briggs & Stratton's Big Cheese kinda didn't get it, either.

The Chrysler theft occurred LONG before he had the bright idea to "reduce labor costs."

Of course, the Chinks weren't TOO smart: they duplicated the B&S engine-ID plate, but ran the same stamping so the serial number never changed...

Nevertheless, "reduced labor costs" don't mean too much when you lost $40Million of gross sales.

neomom said...

I was referring to just the GE folks.. but there are many, many more examples of US biz's that were lured into China by not just the promise of cheap labor (and mostly crappy quality) but by that giant potential market.

The steep learning curve has been that the PRC will not give regulatory authorization to just about anything from a non-PRC multinational, but shamelessly steals the IP to have PRC companies make for "The Market".

Add in that crappy quality, and the extra folks and inventory to manage it. Add in the extra cost of shipping.

After that, some companies are waking up to the fact that the costs and difficulties of doing biz in the PRC isn't as good of a trade-off as the "price" would indicate at first glance.

In some cases, we could get stuff at a lower cost from the US - at a lot less risk.