Access to the world’s second-largest economy is critical for nearly any global company. Yet this often comes at a cost: the transfer of the very technologies that leading business officials — including GE chief executive Jeffrey Immelt, who heads an Obama administration panel on U.S. jobs and competitiveness — cite as essential to the United States’ economic future. The “synthetic vision” system, for example, could be worth millions of dollars to airlines, which could significantly reduce costs from weather-related delays.
GE, like other companies, must weigh which technologies should be brought to joint ventures with China and how to protect them from being stolen or misused. These decisions face virtually any executive trying to develop a presence in the country — from the most sophisticated technology firms, which worry about software piracy, to old-line industrial equipment makers, which have seen knockoffs of their products pop up soon after making deals with Chinese partners.
Under the agreement with AVIC, GE avionics will be on board a new Chinese commercial airliner that is likely to become a rival to aircraft produced by U.S.-based Boeing and Europe’s Airbus. The potential competition with Boeing, coming at a time when the United States is fighting to maintain its own manufacturing base, has stirred some American criticism.
But GE executives say they have had no second thoughts. China’s airplane market is booming, and the deal was too important to pass up, they said, even at the cost of sharing the avionics technology.
“We are all in and we don’t want it back,” said Lorraine Bolsinger, chief executive of GE Aviation Systems. She said new airplanes don’t come along that often, and that the chance to be part of developing a major new aircraft is not to be missed — even if most of the jobs will be in Shanghai or elsewhere in China.
“We don’t sell bananas,” she said in an interview here. “We can’t afford to take a decade off.”
But American business leaders wonder privately whether companies such as GE are at risk of giving up long-term strategic advantages when they agree to technology-transfer deals for shorter-term gain.
GE executives maintain that is not the case. They say that they negotiated robust protections in their contract with AVIC. The 50-50 joint venture, for example, has strict limits on employing Chinese nationals who have a military or intelligence background. A board committee that monitors compliance with the joint venture agreement is effectively under GE’s control and can, in a dispute, overrule the full board, Bolsinger said.