Thursday, July 1, 2010

General Electric: "Immelt hits out at China and Obama" (GE)

UPDATE: "General Electric says CEO comments reported out of context but There Were Earlier Signs (GE)"
Original post:
Very odd, publicly rebuking your overlords.
GE is the poster child for "State Capitalism".
From the Financial Times:
Jeffrey Immelt, General Electric’s chief executive, has launched a rare public 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 contemplating better prospects elsewhere in resource-rich countries and that those nations did not want to be “colonised” by Chinese investors.

“I really worry about China,” Mr Immelt told an audience of dozens of top Italian executives, referring to the Chinese government which he accused of becoming increasingly protectionist. “I am not sure that in the end they want any of us to win, or any of us to be successful.”
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],” the 54-year-old executive told an audience of somewhat surprised Europeans who had seen higher levels of US growth as a beacon of recovery.
“We [the US] are a pathetic exporter… we have to become an industrial powerhouse again but you don’t do this when government and entrepreneurs are not in synch.”

Mentioning a meeting with Jean-Claude Trichet, he said the president of the European Central Bank “worries about inflation everyday”, in contrast to Ben Bernanke, chairman of the Federal Reserve, who will keep interest rates “at zero” as long as necessary.
Coming off one of the most challenging years in GE’s long history, Mr Immelt voiced many “worries” on his mind, including the prospect of persistent low growth in Europe and listing Greece, Spain and Ireland for their “volatility”.

Mr Immelt acknowledged the importance of the Chinese market, which contributed $5.3bn to the group’s revenues last year, but declared that GE was encountering its toughest business conditions there in 25 years.
“China and India remain important for GE but I am thinking about what is next,” he said, mentioning what he called “most interesting resource-rich countries” in the Middle East, Africa, Latin America plus Indonesia.
“They don’t all want to be colonised by the Chinese. They want to develop themselves,” he said.
The comments from the GE chief echo a rising chorus of complaints from foreign business groups in China about the regulatory environment they face. However, it is extremely unusual for senior executives at companies with extensive operations in the country to voice such public criticisms, for fear of retaliation from Beijing.

Foreign companies have complained about China’s public procurement policies, about technology encryption rules that some IT companies claim will force them to hand over key software secrets to the Chinese government, and a general increase in discrimination in favour of local companies.
Speaking of GE Capital, its finance arm that generates about half of total group revenues, Mr Immelt said some kind of global homogenisation of banking regulation was inevitable, adding: “It is impossible for countries to like growth and hate banks.”

Having taken over GE just four days before al-Qaeda’s strike against the US in September 2001, Mr Immelt was also worried about what he called “tail events”. He mentioned the 9-11 attacks, Hurricane Katrina which hit New Orleans in 2005, the collapse of Lehman Brothers in 2008 and, finally, BP’s Gulf of Mexico disaster.
“How do you run a company when a one in a million chance can happen?” he concluded.
GE was hosting the dinner on the roof-top of Castel Sant’Angelo, a former Vatican fortress and prison, now a museum, overlooking Rome.