HON Honeywell International Inc

By Brian Spegele 

BEIJING-- General Electric Co. is targeting billions of dollars in new sales in risky markets from Pakistan to Egypt as it and other U.S. industrial giants seek to piggyback on Beijing's push to open more markets to Chinese companies.

As China's economy slows and shifts away from the heavy industry that long drove growth, multinationals are being driven to follow China's state giants deep into the developing world. In the process, many--including Honeywell International Inc. and Siemens AG--are throwing their support behind China's bid to build roads, ports and other infrastructure across a wide swath of geography.

GE has been among the U.S. companies most aggressively seeking to capitalize on President Xi Jinping's initiative, known as " One Belt, One Road." By partnering with Chinese companies in emerging markets, GE said, it can boost sales of its equipment such as boilers for coal plants and wind turbines.

The aviation-to-health-care conglomerate thinks it can attract annual orders of more than $5 billion in the coming decade in the roughly 65 countries targeted under One Belt, One Road, said John Rice, GE's vice chairman who leads global operations, That is more than five times as much as in recent years in those countries. Much of the growth will come from supplying power infrastructure in underdeveloped markets, Mr. Rice said.

"We have to recognize that markets like China's have evolved," he said. The Chinese government is saying that "companies can't just rely on the domestic market to be successful. They have to go global."

Take Pakistan, one market that has been aggressively targeted by Chinese engineering companies and GE. Beijing has committed to spending at least $35 billion on financing and building power plants in Pakistan by 2030. GE said its orders in the country have risen to more than $1 billion today compared with less than $100 million five years ago.

The company is joining other U.S. and global industrial giants saying they are eager to do more business with Chinese companies as they go global. Top executives at heavy-machinery maker Caterpillar Inc., shipping giant A.P. Møller-Mærsk A/S and others have also publicly supported the One Belt, One Road plan.

"Everybody is figuring out that this is a serious effort," Mr. Rice said. "It is going to happen with us or without us."

GE executives say the company is already supplying Chinese firms with natural-gas turbines in Pakistan and Bangladesh, wind turbines in Kenya, and hydropower equipment in Laos, among other deals.

GE has done business in China in one form or another for more than a century, setting up a lightbulb factory in the northern city of Shenyang as early as 1908. It employs around 22,000 people in China, though its revenue was near flat last year, compared with double-digit growth in recent years, reflecting China's slowdown.

Underlining its support for China's global expansion, GE hosted on Friday nearly 1,000 industry players at a lavish compound the Chinese government frequently uses to receive foreign dignitaries. A former Chinese vice foreign minister was in attendance.

For China's companies, the international ambition is born out of necessity. Left with vast oversupply of everything from steel to advanced industrial parts as the economy slows, they must look for growth outside China's borders.

The push comes with massive challenges, including a shortfall of financing for infrastructure in frontier markets. Even the launch of the Beijing-backed Asian Infrastructure Investment Bank, which has been called China's answer to the World Bank, hasn't been enough to close the gap, Mr. Rice said.

Yet, seeking out new business across frontier markets will be key for GE's growth, analysts said. The company's power segment is already one of its biggest business lines, and increasing revenue will be tough in developed markets such as the U.S.

"All the new capacity is happening in the fast-growth markets," said Deane Dray, an analyst at RBC Capital Markets, which said it has done business with GE in the past year. "And that's where GE is focused."

Saeed Shah in Islamabad, Pakistan, contributed to this article.

Write to Brian Spegele at brian.spegele@wsj.com

(END) Dow Jones Newswires

October 14, 2016 09:01 ET (13:01 GMT)

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