A Logical Next Step

China is not only the world’s second largest economy, but it is the fastest growing. Therefore, it is no surprise that companies, such as GE, are expanding operations in the country to win more abroad – and at home. In fact, GE’s aviation business in China already has created 1,800 high-technology jobs in the United States with expectations for that number to to grow through projects such as the company’s avionics joint venture with the Aviation Industry Corporation of China (AVIC).

First announced in November 2009, GE Aviation is working to establish a commercial joint venture (JV) with AVIC, with the goal to create avionics products and market commercial avionics systems worldwide to aircraft manufacturers such as Boeing, Airbus, Bombardier, and Embraer.

GE’s contribution to the JV will be its open-architecture, integrated modular avionics (IMA) technology – technology likened to the operating system of a computer that allows software to be installed on top of it – while AVIC’s expertise is expected to provide additional displays, navigation, and sensors to the JV.

The JV is currently focusing on its first customer, COMAC’s C919. In addition to the IMA system, the JV will provide the aircraft’s flight management system, flight deck display systems, onboard maintenance system, and the flight recording system.

However, that is just a piece of GE’s business in China – a business that employs a total of 13,000 employees in China with sales of $5.3 billion. GE Aviation specifically boasts a strong relationship with China dating back to the 1980s, primarily as a supplier of engines. GE’s aerospace portfolio has since grown to include avionics, and today, business in China includes collaboration on the new ARJ21 regional jet and the COMAC C919 narrow-body aircraft, the latter through CFM International, GE’s joint venture with France’s Snecma. GE Aviation reported revenues of $778 million in 2010 from sales and services in China alone, and they expect that figure to be $1 billion for 2011.

Growing sales in emerging markets like China is proving to be critical not only to U.S. companies’ bottom lines, but also to U.S. jobs. GE’s JV with AVIC is no exception. It will allow GE to grow business and continue creating jobs globally, including at least 300 high-tech jobs in the United States, with predictions for that number to grow. These jobs are in communities like Grand Rapids, MI and Clearwater, FL, and they represent the type of high paying, sought after jobs that are critical to America’s technology base.

An important component to the JV with AVIC are the compliance safeguards in place to protect technology developed by the joint venture, as well as GE technology sold to the JV. The strict protection of GE’s intellectual property is critical to the company’s future. For this JV with AVIC, that means GE will control compliance through a permanent GE-nominated CEO, a compliance officer reporting to GE, and a compliance committee. In an industry such as aerospace, a company’s intellectual property is everything, so it only makes sense that GE would fight hard to ensure they are properly protected as they move forward with this or any joint venture.

Throughout the creation of the joint venture with AVIC, GE has been open about their continued consultations with leading experts in global trade and commerce, as well as with all relevant U.S. government agencies to ensure full government compliance and the highest level of security with concern to IP. What is more, both the Departments of Commerce and Defense have thoroughly reviewed the JV and have determined GE’s IMA technology involved in the JV is a commercial and not a military transaction, and it does not require a license to export to China.

Joint ventures are nothing new for GE – and that experience has no doubt proven useful when establishing compliance plans to protect their valued technology. The JV with AVIC is the fourth 50/50 joint partnership company for GE Aviation. The other three are CFM International (producer of the most popular jet engine in aviation history), GE Honda Aero Engines (producer of jet engines for small corporate jets), and The Engine Alliance (a JV between GE and Pratt & Whitney, which produces engines for the A380). In China specifically, GE has had a number of partnerships across various industries, including transportation, energy, and aviation.

While working with China may not come without its challenges, they are an emerging market that companies seeking growth cannot ignore. In addition, with international companies such as Switzerland’s Liebherr Aerospace and France’s Airbus forming partnerships with Chinese companies, it is critical that GE and other U.S. companies do the same in order to maintain America’s global competitive edge.
 

GE Aviation
Cincinnati, OH
geaviation.com