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Electrifying the ASEAN countries

John Rice, vice chairman of GE and CEO of GE Global Growth and Operations
John Rice, vice chairman of GE and CEO of GE Global Growth and Operations, gives a speech at an AmCHam event at the Hotel Le Royal earlier this month. PHOTO SUPPLIED

Electrifying the ASEAN countries

With more 300,000 employees across 170 countries and close to $ 150 billion in revenue last year, General Electric is one of the world's largest companies. Established in Cambodia in 2007, the US multinational has over 100 years’ experience in the region developing technology solutions that range from power plant infrastructure to jet engines and household products. The Post’s Daniel de Carteret sat down with John Rice, vice chairman of GE and president and CEO of GE Global Growth and Operations, during a visit to Cambodia this month to talk about the firm’s ASEAN expansion plans and how the US multinational adapts to a shifting global economic climate.

GE is a huge company; tell me about your role and how the company positions itself to expand throughout Asia?
We created an organisation in late 2010, for the purpose of trying to figure out in the 21st century what it was we needed to do to change the way we operated GE in order to be successful. A global business in the 1980s could be run by having most of senior people living in the United States, or if you’re a European company in Western Europe. The decisions would get made in the headquarters, the big, kind of monolithic organisations; you fly in, sell your jet engine, your gas turbine, leave and get paid, export the profits and everybody was OK with that. It was like this for much of the ’70s, the ’80s and some of the ’90s. Then things started to change and where we put our leaders started to change. This is a roundabout way in saying what we do, and part of what I am charged with, is helping the company rethink what is a successful global enterprise in the 21st century going to look like? We are on that journey, we don’t have all the pieces in place, we are not ready to declare victory, but that is part of what we do.

What does that mean, practically speaking, when you are looking at expanding in places like Cambodia?
In a world where speed has a different connotation, whether we are selling a jet engine to Qantas, or a gas turbine in Timbuktu, our customers expect local capability, local service and responsiveness, so we can talk about the global enterprise and world class jet engines – that’s great, but when it comes to meeting their needs, they need to be able to look at somebody locally and actually believe that they represent a company that will respond to a quote to a bid, to a problem, to a service issue. That is the art and science of what we are trying to do. The best global companies are going to leverage those global strengths. If you buy our jet engine, you don’t want the second best technology you want to get on a plane that has the best jet engine technology. So you have to have global strengths that you can leverage. Then the fit, feel, finish and delivery, follow through, fulfilment has to be really local.

What is happening here in Cambodia as part of that transition, to understand what is needed here and how to meet those needs?
It starts with credible people on the ground. So step one, is we have to hire people who share our values and voice. In an organisation like ours it all starts with having people who believe in the way GE likes to do business. So transparency, ethics and things like that. That is the first test you have to pass. It is easy to hire somebody with your values, but what you don’t know until after you hire someone is are they going to have a voice in the organisation? Are they going to be somebody who can make things happen? Who can look up and see this big $150 billion, 300,000 employee company with lots of resources, but also lots of things around the world demanding the attention of those resources, and create things on he ground here – get projects that have a shot at being done, make a case for investments, whether it is in healthcare or power generation that runs on rice husks. It is harder here in Cambodia because of the size and it will be a long time before Cambodia will be a country which helps a business make its quarter. But that is OK, we have lots of places like that. The sum total equals our success, so we care about small things, not just big things.

What are some of the things that GE is currently working on in Cambodia and where are the opportunities to expand?
The rice husk project is one. By the end of the year we expect to get that up and running. There are two things; bio-fuels and the second is distributor power, so smaller power block sizes that can be used to get to people who today don’t have power transmission and distribution infrastructure. Many of the people in the country don’t have that infrastructure, like the wires, so you look to solve that problem on top of the power generation. We are finding around the world that investment in transmission and distribution is sadly lacking in lots of places, not just developing markets, but in Germany and places in the United States don’t always have the transmission and distribution infrastructure they need. But you still have this huge demand from much of the world’s population; they don’t have any electricity and these smaller power blocks sizes are one way to fix that. It is a quicker way than a big combined cycle gas turbine were you to have gas if you want to run one of those, and as a fuel source if you think not just abut rice husks but, Napier grass, coconut leaves, wood chips, bamboo – there is a lot of stuff out there that people don’t eat that can be used for a constructive purpose.

In healthcare, we started it through our foundation with capacity building. You have lots of equipment in countries like Cambodia, that has been purchased or given or provided, whether it was purchased by somebody in Cambodia or provided by an NGO, you have to have people to maintain it. So we have trained 30 biomedical technicians to keep stuff running. And it is not restricted to our equipment because at some point hopefully someone will want to buy more GE equipment, so it is not purely philanthropic, but the fact is the foundation and our view is to keep all the equipment running, not just the GE equipment. In the end the best equipment provider is going to be the one that people choose, so we do that. We have had discussions with local people about aviation and capacity building in aviation. We see Cambodia as a work in progress and a journey. We are not here because we think we are going to sell bunch of stuff next quarter. There’s a view that over time as this country develops, there’s a role for GE to play, and in the end we would expect to have commercial success. We are here for a number of reasons, including that, but that is definitely not the only one.

How does the GE’s transition from a global company to a shifting provider in local markets play out with ASEAN integration?
Well, we think it fits hand-in-glove because what we want in all of this is a level playing field. Our goal is not to anticipate the next source of geopolitical strife; we go where there is a demand for infrastructure and where people need the kind of stuff that we have. We go where there are natural resources, market size and population. But we believe that any country that needs infrastructure we should be part of. Our goal is to have level playing fields everywhere we work, so anything that reduces tariff and non-tariff trade barriers we are in favour of. And we will compete and we will win our share. We are not going to win everyone, but that competition is going to make everybody better off. If you look at what we do in ASEAN today, we have 7,500 employees and two-thirds of what we do in the ASEAN countries gets exported to another country. The simple way to think about that is that that only exists because the barriers are low enough to facilitate that trade. If barriers go down further we will hire more people, we will expand what we do here. If barriers go up we will have fewer people, so the way to think about that is that 7,500 employees exist because they are low enough to make it work but there still are barriers. We are limited from doing other things that we might otherwise do.

There are few Cambodian companies with a large international presence, most are very small, which in some markets can create nervousness from the opening up of competition. With ASEAN integration approaching, how does the market ensure a rising tide lifts all boats?
You have to have some people or some companies that create some winners. Because the issue ends up being, when you lower barriers, from a macro perspective things should get better, you should create more economic growth and that should be a good thing. The tide should rise and carry a lot of boats with it. But the problem is that there is always a dislocation, so nobody wants to deal with the friction created by the dislocation, you either ignore it if you’re a politician at your peril or you have to retrain, and that is hard work – to convince people that are used to being in farming that there is a better way to make a living. I think you have to have a way to short circuit, if you will, the dislocation and create some winners. You have to have some people, some investors, maybe some companies that take a long-term view. I think that is what part of it is. I was in China last week at the World Economic Forum and there was a lot of discussion about innovation – is this the big solution to so many things. But you know there is a dislocation that comes with innovation. When you innovate you create something new, a lot of times. There is somebody that is doing the old thing that gets disenfranchised. The iPod was a tremendous innovation and I don’t know that the people at Sony were all that wild about it. So there is a dislocation that comes with it. If you don’t do it, you hold yourself back, but we have to get better at dealing with the mechanics of the dislocation and helping people through it. And I think that takes committed investors.

Corruption and red tape is always spoken about when doing business in Cambodia. How much of a threat is this on potential investment and investors?
It will deter some investors; I think it can have an impact in terms of the overall level of economic growth. The other thing I would say is, Cambodia hasn’t cornered the market on corruption. I travel to 40 or 50 countries a year, and I see a lot of issues in a lot of places. We believe, and I think our reputation helps us, that you can do business here the right way and so we don’t think we have to compromise in any way to do business here. We wouldn’t compromise in any way. We think that there are many senior leaders in government that understand the negative implications that go with corruption and the fact that it does drain the effort to improve the lives and the standard of living of Cambodians. For us the effort to do what we do, and to do it here is worth it. But there is no question that corruption matters and everybody has to help fix it in their own way. There isn’t any one size that fits all to help clean up corruption around the world.

Cambodia has been growing at a rapid rate. Where do you see the economy heading?
It would help to figure out the natural resources thing. Getting access to some of the assets that are on ground that sit between here and Thailand would obviously be very helpful. There are very few governments in the emerging market world today that can afford to do everything they need to do, so you need to attract foreign direct investment. For companies like ours, we are prepared to invest. We are not afraid of investing in countries like Cambodia. We also know that there is capital sitting on the sidelines today that wants to find its way to good infrastructure projects. A good infrastructure project is one that gives investors a reasonable degree of certainty, at least, so that they can create a reasonable risk adjusted return – if I take a higher risk I want and need a higher return. If I am going to take a lower risk I will settle for lower returns. The countries that figure that out, they will get access to capital because there is a lot of money that is trying to find a way to long-life infrastructure projects. But the connection is more complicated; connecting the capital in the post-global financial crisis world.

You are in Cambodia to speak about management and leadership. What will you be passing on to the business community here?
When I first started I was a finance trainee. We have a finance management program so I joined that out of school. I remember looking at this big organisational chart and there wasn’t even a chart that showed that the chairman and me were even close. I was like on page 45. I used to watch the senior people come in to work and I used to think that that would be a great job because you had the big title, you had the big office, you sit around telling people what to do and they would go do it, you would get paid a lot of money – and it was good. I used to think it was all about the title and where your box was on the organisation chart. I didn’t really know but I suspected that every time you moved up you got more stature because of your higher box. But I began to realise after a while that that really had nothing to do with it. The most successful leaders I saw in GE – and this really pre-dates what we did organisationally a few years ago – were the most influential. So you begin to realise that it is really all about influence and it has nothing to do with the title. Even when you get the title, your ability to lead and how influential you are is the most important thing. How you get the team together, and create a better outcome, not what order you give or what decisions you make. The decisions are part of it, but if you don’t have a good team and they are not working well together then you are not going to make good decisions. If you have a good team and they are bringing you good ideas and they are working well together, the quality of your decision making is going to increase. People aren’t working for you, you are working for them, and your job is to make people beneath you in the organisation successful. You make decisions because you have to sometimes, but that is not what makes you successful. Influence is so much more important than the title.

This interview has been edited for length and clarity.


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