GE snubs U.S., sells technology to China
Despite risks, General Electric says China is too big a market to pass up.
As reported by the Washington Post, General Electric (GE) has entered into a contract with China's state-owned aviation industry to provide advanced technology for their aircraft. And while GE insists it's taking precautions to make sure the technology isn't copied or used for unintended purposes, many experts are crying foul.
GE is betting that China will deal ethically with US developed advanced technology.
Despite GE's insistence this is purely a business deal, which on-face, it is, GE is taking a substantial risk. China is notorious for using foreign corporations to gain access to key technologies, and then copying them and developing their own internal source for them, thereby cutting out the original developer and keeping the profits. Indeed, China is known for "bootleg" --well, everything, and advanced technology is no exception.
While GE will certainly earn substantial short-term profits, there's no guarantee that China will simply continue to pay GE for its products and refrain from copying them. Furthermore, there's little guarantee that China won't also use GE's technology to develop its own military capabilities.
GE's deal costs US jobs
Under the current agreement, China will use GE technology to construct its own airliners. This decision will cost American jobs as China will be able to build their own technologically advanced airliners instead of purchasing them whole, or their component parts from US manufacturers such as Boeing.
Despite the criticism these realities bring, GE defends its position. In a recent article in the Washington Post, GE's Aviation Systems Chief Executive, Lorraine Bolsinger, was paraphrased as claiming the opportunity was too great to be missed, "even if most of the jobs are created in Shanghai or elsewhere in China."
There's little doubt the decision will boost GE's market share and stock prices in the near-term. And whether or not GE creates jobs in the US is of little concern to Wall Street. But if the Chinese eventually decide to duplicate and produce their own versions of the GE technology, the strategy could backfire.
Not only will China be in position to provide their own versions of GE technology to themselves, but they could also begin exporting it as well, cutting GE out of their own markets in the future. If that happens, it may be just desserts for GE, but it will also be bad news for the US and our future.
© 2011, Catholic Online. Distributed by NEWS CONSORTIUM.
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Keywords: General Electric, GE, China, advanced technology, jobs, profits, Wall Street
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