"Reverse Innovation"

GE recently introduced 2 products that CEO, Jeff Immelt, termed as “reverse innovation”. These are a USD1,000 handheld electrocardiogram devise and a USD15,000 portable personal computer-based ultrasound machine. These 2 products were originally developed in emerging markets and then brought back to the US for launches. This runs contrary to previous practices where product developments are always done in the US & then adapted for emerging markets. “Success in developing countries is a prerequisite for continued vitality in developed ones,” Jeff Immelt stated.

GE now has more than a dozen “local growth teams” in China & India. GE’s business in China is expected to grow 25% this year, largely due to relevant products developed on site for the local market.

Another industrial power house, Honeywell, is adopting a similar strategy. It opened a Special Materials Asia Technology Center in Shanghai in 2004, being 1 of 2 such centers outside the US, with the other one located in Seezla, Germany.

Philips Lighting is also focusing its R&D in China, with Philips already commanding a high share in the domestic lighting market. Its Technology Center in Zhang Jiang houses over 180 engineers. Philips Lighting devotes over 4% of sales to R&D each year. Emerging markets currently contribute to over 30% of global annual sales.