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General Electric (NYSE:GE) in "Country to Company" Relationship to China


Sunday, April 4th, 2010

Last November General Electric (NYSE:GE) and China announced they had entered into what they called a "Country to Company" agreement, which implied and I think, outright announced, that China considered General Electric to be on equal footing to another country; as a matter of fact, calling it a "Country to Company" agreement by China did put General Electric on par with them being a country.

This is a fascinating development, but not really a surprising one when you think of it. General Electric, at the time of this writing, has a market cap of a little under $200 billion. There are a number of countries in the world that struggle to come close to that figure, so General Electric, and other companies, indeed are larger and more powerful as a business partner than entire countries.

Some have become bothered by this reality, but it's not that big of a deal to me, and General Electric and other companies have every right to enter into agreements with business partners from other countries.

One factor which has troubled some people is the large companies like General Electric, with the deals they've made with China and other countries, having a place on the president's Business Advisory Board, while small business representatives like the National Federation of Independent Business and the U.S. Chamber of Commerce aren't invited to the party.

This of course does leave out an important voice of American enterprise out of the equation and limits the view of what needs to be done, especially with the creation of American jobs.

Combine the deals of General Electric with China in its new capacity, and it does give an appearance of potential conflicts of interest, at least as it regards taxpayer dollars being distributed to them on behalf of building up industry in China.

Why this doesn't bother me is far too many businesses are going to government to get handouts, just like General Electric is, so to condemn them while letting other businesses slide by is very discriminatory in applying that standard.

Until taxpayers rise up and demand the government stay out of business - other than the enforcement of contracts and maintaining a level playing field - this is going to go on, and it doesn't matter what name is put on the door of the company doing it.

As far as General Electric making deals where they're considered equal partners with the Chinese, that's a good step in my estimation, and shows the power of the entrepreneur in creating a company like General Electric which can command that type of respect. Now just drop the government handouts and we'll all feel better about your accomplishments.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: business , china , general electric

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