GE Sees Digital Energy Sales Doubling on China XD Partnership

General Electric Co. said a partnership with China XD Electric Co. will help double sales of power transmission products and services in its digital energy business to $4 billion annually in the next decade.

GE’s 3.38 billion yuan ($552.2 million) purchase of a 15 percent stake in XD Electric, a power equipment maker, was completed today, 15 months after it was announced, according to a statement. GE and China XD also agreed to form a joint venture to sell grid-automation equipment in China, the companies said.

Jeffrey Immelt, chief executive officer of Fairfield, Connecticut-based GE, has pledged to expand the share of the company’s profit derived from industrial businesses while simultaneously pursuing expansion in emerging markets such as China. Aging transmission infrastructure in the U.S. and Europe also presents opportunities for the partners, according to Bob Turko, general manager of GE’s power transmission business.

“This deal aligns really well with strong growth dynamics we’re seeing in this segment,” Turko said in a telephone interview. “This is a big market segment and it helps us build up a bigger base for our industrial businesses.”

Parent China XD Group, which manufacturers high-voltage transformers, circuit breakers and capacitors, was founded in 1959 and has more than 70 subsidiaries and 22,000 employees, according to its website. It exports products and technologies to more than 50 countries including Germany, the U.S. and Singapore, the website shows.

Regulatory Approval

In addition to high-voltage transmission equipment, GE’s digital energy business sells automation, monitoring and diagnostic equipment to utilities and engineering firms, according to its website.

The investment, announced in May 2012, was delayed as the companies sought approval from Chinese regulators, Turko said.

“The regulatory approvals took a little bit longer than we thought but we’ve been building a business in the meantime,” Turko said. “We’ve started to build strong momentum and in fact we’ve taken the first couple of orders from U.S. and European utilities.”

Turko declined to comment on whether Xi’an-based China XD would buy GE’s Prolec joint venture with Mexico’s Xignux SA. Three people with knowledge of the situation said in May the companies were in talks over such a transaction.

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