South-Western - Management  
Wisconsin Eager to Supply as China Demands More Medical Goods
Topic Global Management
Key Words Trade balance, multinational corporations
InfoTrac Reference CJ114799482
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News Story

Communist Party Boss Deng Xiaoping transformed China into a global industrial power, but it's his son, Deng Pufang, who embodies a new front of social change. He is among the nation's most vocal advocates for health care reform, including modernizing hospitals and transitioning to a market-based public health system. This is no small change in a country that has for millenniums treated its sick with herbal remedies, natural therapies, acupuncture, and reflexology.

Exports of medical equipment to China increased 60% in 2003, and have become Wisconsin's single biggest export business to China. Wisconsin-based GE Medical Systems ranks as one of the biggest beneficiaries of China's medical spending binge. The group had $700 million in sales in China in 2003, and expects double digit growth for years to come.

GE Medical plans to add 600 jobs and an $85 million office complex near Milwaukee, and is also expanding in China, where it employs 2,200 and operates three factories. The three GE Medical factories in China import as much as 75% of their advanced components from the U.S., so adding jobs in China means adding jobs back home.

GE's experience in China is unusual. The U.S. trade deficit with China has widened to record levels as a rising tide of man-made China goods flood U.S. stores and decimate American rivals that cannot match low production costs.

Last year's SARS outbreak fueled demand for diagnostic equipment, and now bird flu requires rapid detection systems also. This has sustained the urgency to upgrade facilities. There are 66,000 hospitals in China, and most of those have only the most rudimentary medical equipment or none at all.

GE Medical is the world's leading producer of medical imaging equipment and diagnostic technology.

Questions
1.

GE Medical is a multinational corporation. What does this mean?

2.

React to the following statement: The U.S. trade deficit with China has widened to record levels as a rising tide of man-made China goods flood U.S. stores and decimate American rivals that cannot match low production costs. How is GE Medical overcoming this trade imbalance?

3.

How does GE medical benefit from having factories in China, and how does this impact its U.S. factories?

Source "Wisconsin Eager to Supply as China Demands More Medical Goods," Milwaukee Journal Sentinal, Knight Ridder/Tribune Business News March 31, 2004.
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