Home> Business

Haier's buy of GE unit helps US push

By Paul Welitzkin in New York ( China Daily USA )

Updated: 2016-01-18

  Print Mail Large Medium  Small 0

The "GE of China" - Haier Group - is buying a unit of GE of the United States to bolster its appliance business in that market.

Haier Group, which makes refrigerators and other home appliances, is paying General Electric Co $5.4 billion for its appliance business. GE is selling the unit to focus on technology-driven businesses such as medical equipment and jet engines.

"Haier has been referring to itself as the GE of China," Steven Winoker, an analyst with Sanford C. Bernstein in New York, told China Daily in an interview. "This will enable them to drive their global brand ambitions and also get a larger share of the US market."

Under the agreement announced on Jan 15, Haier can use the GE brand name for 40 years, including in China. GE Appliances will remain headquartered in Louisville, Kentucky and the business will continue to be operated independently under the direction of a local board with the participation of GE's current senior management team, who will manage the business.

Haier is committed to investing in the continued growth of the US business, the Chinese company said in a statement. The company is based in the eastern Chinese city of Qingdao. It reported 2014 revenue of $32.6 billion.

Haier's buy of GE unit helps US push

GE had attempted to sell the business to Sweden's Electrolux AB for $3.3 billion, but that deal was scuttled on antitrust concerns.

"I think it is highly unlikely there will be antitrust issues given Haier's relatively small share of the US appliance market," said Winoker. "This is a very different situation from Electrolux."

Haier and GE also agreed to form a strategic partnership to cooperate in areas such as the Internet, health care, and advanced manufacturing.

"This strategic alliance provides a new starting point for Haier and GE and I am confident that this partnership will deliver enhanced value to the stakeholders of both companies," Zhang Ruimin, chairman and CEO of Haier, said in a statement.

"Haier has a stated focus to grow in the US, build their manufacturing presence here, and to invest further in the business. GE Appliances provides Haier with great products, state-of-the-art manufacturing facilities, and a talented team," said GE CEO Jeff Immelt.

The acquisition includes GE Appliances' 48.4 percent stake in Mabe, a Mexican appliance company that has operated a joint venture and has had a sourcing relationship with GE Appliances for 28 years.