GE's 2007 International Sales to Top U.S. Sales
General Electric said that, for the first time, it would earn more this year from its operations outside the United States than from in the U.S., mainly because of strong revenue growth in emerging markets.
Ferdinando Beccalli-Falco, who heads GE's international operations outside the U.S., said business in emerging markets was growing at more than twice the pace of developed markets and was likely to expand by 20% a year for the next several years.
"This year is going to mark a very important year because it is the year when the sales of the company outside the United States will be bigger than inside. It's really the first time that it happens," Beccalli-Falco said in an interview on Monday. "For us, the growth in emerging markets is twice, three times in some cases, that in the developed countries."
GE , the world's second-largest company by market capitalization, makes everything from light bulbs and diagnostic imaging systems to aircraft engines and nuclear power plants. GE is also the parent company of CNBC.
Beccalli-Falco said GE's business in emerging countries has been growing at about 20% in the last three years, against 7% to 9% growth in the developed world. "Unless there is some kind of a catastrophic event, an unexpected event, this (emerging market) growth could be sustained for a considerable amount of time."
In July, Beccalli-Falco told reporters he expected sales and profit growth of 30% to 40% in emerging countries over the next 3-5 years.
Growth in emerging markets, especially in India, China, Southeast Asia and the Middle East, was expected to continue at a healthy pace, even as the U.S. economy slows -- weighed down by problems in the housing loans market.
"We expect growth in the U.S. economy to be slower but for us that would be compensated by what's happening outside the U.S.," he said.
Beccalli-Falco said GE would make sizeable investments in emerging markets to develop new manufacturing and research facilities.
GE plans to make its John F. Welch Technology Centre in the Indian city of Bangalore -- already its largest research and development centre outside the United States -- the largest such facility globally in the next five years. "We have about 3,500 scientists, researchers and engineers work in Bangalore. That number would be raised to 5,000 in the next five years, he said.
India has become GE's fastest growing market, while China leads in terms of the volume of business. But among regions, growth in the Middle East and Africa has been "phenomenal" and would be its largest market in terms of business volume this year, Beccalli-Falco said.
GE won a total $9.5 billion worth of orders so far this year in the Middle East and Africa, the highest in any region outside the United States, compared with just $1.6 billion of orders in 2002, he added.
Beccalli-Falco said as most emerging economies were investing heavily in developing their infrastructure, business would be strong for companies like GE.
GE's market value of $424 billion is second only to Exxon Mobil's $513 billion, according to Reuters data.