GE joins XD to gain grid foothold

China Daily (Hong Kong) - - BUSINESS COMPANIES - By ZHENG YANGPENG zhengyang­peng@ chi­nadaily.com.cn

Gen­eral Elec­tric Co said on Wed­nes­day that it has formed a part­ner­ship with China XD Elec­tric Ltd, a move that will give the United States-based con­glom­er­ate a foothold in China’s vast elec­tric­ity in­fra­struc­ture mar­ket.

The deal was ini­tially an­nounced last May, and it has since gone through reg­u­la­tory ap­provals in China.

Through a pri­vate place­ment, GE took 15 per­cent of the shares of XD Elec­tric, one of China’s largest man­u­fac­tur­ers of elec­tric­ity trans­mis­sion and dis­tri­bu­tion equip­ment. An­other com­po­nent of the part­ner­ship in­cludes the for­ma­tion of a joint ven­ture to of­fer Chi­nese cus­tomers GE’s lo­cal­ized grid-au­to­ma­tion equip­ment and ser­vices.

The deal will com­bine GE’s grid-au­to­ma­tion ca­pa­bil­i­ties and global en­ergy pres­ence with XD Elec­tric’s com­pre­hen­sive port­fo­lio of high-volt­age power equip­ment to pro­vide to­tal so­lu­tions for T&D cus­tomers.

The part­ner­ship will give GE ac­cess to equip­ment such as large trans­form­ers and break­ers that trans­form and switch power within the grid, Zhang Xian­guo, gen­eral man­ager in GE high­volt­age equip­ment global prod­uct line, said.

The part­ner­ship will also pro­vide a gate­way for XD Elec­tric to ac­cess the global mar­ket and ex­pand its prod­uct port­fo­lio, es­pe­cially in grid-au­to­ma­tion equip­ment and tech­nol­ogy, Zhang said.

The part­ner­ship shows GE’s am­bi­tion to ex­pand the share of its prof­its de­rived from in­dus­trial busi­nesses, while pur­su­ing ex­pan­sion in emerg­ing mar­kets such as China.

Ac­cord­ing to Zhang, much of the trans­mis­sion and dis­tri­bu­tion growth is ex­pected to con­tinue to take place in China, which has in­vested heav­ily over the past decade in grid tech­nol­ogy and in­fra­struc­ture. China rep­re­sents about onequar­ter of the grid in­dus­try’s $100 bil­lion fore­cast global ex­pan­sion.

The deal will help dou­ble sales of power trans­mis­sion prod­ucts and ser­vices in GE’s dig­i­tal en­ergy busi­ness to $4 bil­lion an­nu­ally in the next decade, Bloomberg News re­ported.

Zhao Xi, an in­dus­try an­a­lyst with Hongyuan Se­cu­ri­ties Co Ltd, said the deal would give XD Elec­tric an ad­van­tage in bids for grid work. In­creas­ingly, State Grid Corp of China is seek­ing com­pre­hen­sive so­lu­tions providers for high­volt­age power equip­ment and grid-au­to­ma­tion ca­pa­bil­ity, Zhao said.

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