Courtesy of Karl Denninger of The Market Ticker
There’s dumb, there’s foolish, and then there’s purely-idiotic.
General Electric Co.’s health care unit, the world’s biggest maker of medical imaging machines, is moving the headquarters of its 115-year-old X-ray business to Beijing.
“A handful’’ of top managers will move to the Chinese capital and there won’t be any job cuts, said Anne LeGrand, general manager of X-ray for GE Healthcare. The headquarters will move from Wisconsin amid a broader plan to invest about $2 billion across China, including opening six “customer innovation’’ and development centers.
There go more American jobs.
But – in the end this will kill GE’s medical imaging division. GE had better pay attention to what happened to Fellowes – the paper shredder manufacturer. They moved their manufacturing under a "joint venture" view of the world – the Chinese stole their technology and ultimately effectively stole the tooling and factory too!
While GE can (and will be able to) block Chinese knock-offs from being imported into the US, given its serious political muscle in the United States, there is nothing they can do about sales in China itself, which will ultimately drop to zero.
This is the typical short-sighted crap that American corporations pull. They "see" alleged "growth" and "cheaper manufacturing" over there, but the fact of the matter is that anything not nailed down is stolen and your ability to do anything about the blatant theft and reproduction of intellectual property in China is for all intents and purposes non-existent.
If I had been assigned on those GE puts back in 2009 I’d be out of the stock here. I don’t know if the recent dump has anything to do with this news nor have I evaluated exactly how much of the firm’s revenues come from medical imaging, but that’s not the point.
The underlying point is that this sort of stupidity belies an utter vacuum in intellectual capacity within the executive suite, and when you see that happening as an investor it’s time to leave.
