In Ch.8, we list seven reasons why companies select one country in which to locate over another. One of the seven, proximity to markets, leads to a disturbing headline in yesterday’s paper. The Wall Street Journal (July 26,2011) reports 
the General Electric is moving its 115 year-old x-ray business headquarters unit from Wisconsin to China–its first business unit to be based there. The move, to be completed this year, includes the chief executive and members of the executive team. It is the latest sign of China’s growing importance to GE, which GE CEO Jeff Immelt calls the company’s “second home market”. Earlier this year, Immelt finalized a deal with the state-owned Aviation Industry Corp. to inject GE’s avionics business with a 50-50 joint venture based in China.
GE sees accelerated sales in China’s fast-growing health-care market, with that country’s central government increasing its public health budget by 16% this year, to $26 billion. “As the company grows more global, it’s increasingly important for us to be close to our customers”, says the head of GE Healthcare Global X-Ray. The company wants to develop more medical equipment specifically for the Chinese market. In China, GE Healthcare already employs 700 engineers who are focusing on developing more affordable products for rural health clinics.
Last year, GE launched the Brivo CT, a scaled down CT scanner for less-developed hospitals, and in 2009 it rolled out a low-cost digital x-ray machine for the Chinese market. The company declines to say how many new employees will be added at the Beijing HQ, but adds it does not expect job losses in Wisconsin.
Discussion questions:
1. What are the implications of GE moving an entire multi-billion dollar business unit abroad?
2. What are the dangers to GE in partnering in high-tech areas like avionics and medical imaging with China?
3. What are the other location decision factors, and how do they come into play here?