Behind the scenes around the world, multinational corporations are involved in very sophisticated business dealings…and they often contain an “exchange component” of some sort. This type of business is often referred to as countertrade, a sophisticated form of barter.

One such transaction, where General Electric signed a $900 million contract for high-tech electricity-generation turbines, reinforces how the world is changing. GE had to agree to exchange sophisticated technology with two state-owned Chinese power companies that want to eventually make the equipment themselves.

Interestingly, while China and other nations have enormous leverage (providing access to their huge markets), the question remains if the transfer of expertise from multinational corporations to state-owned companies will work out as envisioned.

There are two major reasons:

Chinese companies presently lack the depth of engineering expertise necessary to fully exploit the technology that would enable competitiveness in global markets. But more importantly technology is rapidly advancing, so any technical know-how obtained today will, in years to come, be less of an issue.

Still, one must acknowledge the Chinese for desiring to better themselves. Wanting to compete in power generation, telecommunications, health care, and other advanced sectors is an ambitious step-up from today’s manufacturing of toys, textiles and TV sets.

BarterNews has an extensive countertrade section.

This entry was posted on Wednesday, February 6th, 2008 at 4:01 pm and is filed under Global Environment, Big Ticket Barter. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.