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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

HOW TO BUY ASIA, AND WIN

GE Capital brings cash and skills to the table


Finding Gold Amongst the Ruins

Who Are These Guys?: Some of the Big Players in the Asian Assets Game

No Accidental Tourists: Foreign bosses bring many advantages

When The Law Is An Asset

NOBODY IS INVESTING MORE aggresively in Asia than GE Capital, a unit of General Electric Co. of the U.S. From its $6.5 billion acquisition of Japan Leasing's major units to the expansion of its Thai auto loan and credit card operations, the company is on a roll. Hong Kong-based Asia Pacific president Daniel Mudd looks after GE Capital's regional interests outside Japan. In an interview with Asiaweek Staff Writer Jonathan Sprague, Mudd emphasizes that GE Capital is not a recent arrival in Asia, and plans to stick around.

There are so many bargains out there, and potential landmines. How do you choose what to buy?

No. 1 is by already being in that market. This is not a terrific time for someone who's not in a market to try and come in and do something because there are so many issues - data, management, culture, your projections about what's going to happen - that need to be related back to your own experience. If you don't have that experience, you're just guessing, and we're not big on guesswork. Two is a lot of analysis that focuses on strategic fit, quality of management and risk. If you actually go down the list, analyzing what your opportunities are, there don't turn out to be thousands of choices, there turn out to be, say, seven or five choices.

But how can you succeed where the original owners failed?

Do you say failed or do you say troubled? Semantics. OK. So then the question becomes: What was the cause? Liquidity, bad credits, imprudence, misfeasance, malfeasance, criminality - you go down the list. If your troubles are related to liquidity, a short-term turn in the market, a lack of ability to expand or compete, then GE Capital, being a company with $300 billion in assets, a triple-A rating, low leverage and strong managment systems, can bring some things to the table.

So these failed companies or bad loans are not entirely failed or bad?

Right.

But there are so many stories about debtors simply refusing to pay.

There are guys that thumb their noses and say "you can't get me" in Chicago. This is not a new thing. Broadly characterized, there's a huge willingness to pay, an acceptance on the part of the borrower that they have an obligation. There's a second set where the customer has a very knotty business problem, so the issues there are the classic workout negotiation through which we develop a plan to work out this debt that's barely acceptable to us and barely acceptable to them, because that's about where the deal gets struck. And at the end of it there's a group of people who refuse to pay. In that case I suppose that it is important that Thailand put bankruptcy and foreclosure laws into place. But we did not take a huge amount of reliance in that happening.

You mentioned how GE Capital's financial strength is useful. Is your success just a matter of money?

We are very, very operationally focused and [use] a form of statistical process management that is very disciplined and has been proven to be applicable in Asia, Europe, America, South America. It doesn't have to do very much with what country you are from or what language you speak. It has to do with job effectiveness. Also, I think there is an advantage from the way we work. We are not a very steep, hierarchical organization. Between me and the guy that's working the auctioned assets in Thailand is one person, not 10.

Do you make big changes in the management of companies you acquire?

We change parts that need to be changed. It can happen in two ways. Take GE Life in the Philippines. We have an integration manager from GE Capital there, and guys like me go do reviews and ask questions. Secondly, the senior team from GE Life just got back from a tour of all our insurance businesses in Europe and the U.S. It's now easy for them to call somebody in England and say: "How should I do this, how did you approach it?" If you're an island unto yourself and all that creativity has to come from your own juices, that's a hard thing to do.


This edition's table of contents | Asiaweek home

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