This document discusses GE Gas Engines' experience expanding into difficult markets. It provides case studies on Bangladesh, Russia, and Indonesia. In Bangladesh, GE Gas Engines selected a new distributor to invest in local infrastructure and educated customers on high-speed engine technology. In Russia, they added distributors for better regional coverage and pursued flare gas opportunities. In Indonesia, they created demand through marketing and had their distributor invest in local service infrastructure given the developing gas distribution system. The major lessons learned were building local infrastructure with global operations, adapting products to local needs through innovation, and investing in technology leadership through core investments and new products.

1. GE Proprietary & Confidential
12/05/2014
1
GE Energy Jenbacher gas engines Presenter and Event
How to do Business in difficult
Countries – Major Lessons Learned
Presented by:
Walter Neuhauser

2. Our Challenge – a fast paced
Environment

3. 2014

4. 2030

5. GE Gas Engines – The Company

6. Impressions from Jenbach, Austria

7. Just an example: The Jenbacher 624 GS…
Engine output: 4 MW
Configuration: 24-cylinder
Engine speed: 1,500 rpm
Displacement: 150l
Bore x stroke: 190mm x 220mm
… powering 10,000 households

8. GE Gas Engines
Landfill Gas Biogas
Coal Mine Gas Cogeneration
1MW saves
32,000 CO2 tons/y
(eq. 15,000 cars)
5,000 cows
fuel 1MW
1MW saves
32,000 CO2 tons/y
J624 (4MW)
avoids 32,000
barrels of oil
70% of JB …..

9. Globalization – it by default takes
you into “difficult” countries

10. Order Intake 2004
Orders > 3MM$
HQ

11. Order Intake 2008
Orders > 3MM$
HQ

12. Orders > 3MM$
Order Intake 2012
HQ

13. High Risk Country Index – difficult, but
important GeographiesHigh Risk Countries according to
“Transparency International”
CPI Score indicates the degree of public sector corruption
- Higher score (lighter color)  Highly clean
- Lower score (darker color  Highly corrupt
- GEJ Focus: Countries with CPI score of 3.3 or less

14. Go to Market Strategy

15. Distribution Channels
(new units/services global presence)
Current
Distributors
GE Gas Engines
Distributors under
consideration

16. Case Study 1:
Bangladesh….a country full
of surprises

17. Capital: Dhaka
Population: 144 million (07/2005E)
Area: 144000 sq km
Sales channel: Orient Energy Systems Ltd.
GDP Nominal
GDP (Market Exchange USD 57,3 billion
GDP (PPP)
Real GDP growth rate
2005(E): 5,4%
2006(F): 5,8%
Inflation rate (2005E) 7,0%
Curren account balance (2005E) USD -4,1 billion
Proven oil reserves 1/1/06E 28,0 million bbl
Oil production (2006E) 6700 bbl/d
Oil consumption (2005E) 91400 bbl/d
Oil imports
Oil exports
Natural gas reserves (2006E) 5 Tcf
Natural gas production (2004E) 462,6 Bcf
Natural gas consumption (2004E) 0,462,6 Tcf
Natural gas imports
Natural gas exports
Recoverable coal reserves
Coal production 2003
Coal consumption (2003E) 0,8 Mmst
....Have you ever heard anything positive about Bangladesh?
Bangladesh – Overview

18. Bangladesh… 2006 situation
Segment size and position
110
164
290
462
'03 '04 '05 '06
• Segment growth driven by
electricity demand of industry
• High natural gas availability
• Attractive gas-/electricity price
situation
• Strong position of competition
MW
= GE Gas Engines segment share

19. What did we face 2006? How did we react?
No appropriate
Sales/Service Structure
Selected new Distributor
who was ready
to invest in local
Infrastructure set up
Low Acceptance of
High-Speed Engine Technology
Educate customers and
highlight benefits
of high speed engines;
Lobbying Efforts
Business Practices not in line with
GE Compliance Requirements
Provided intense training
of new distributor

20. What did we face 2006? How did we react?
No GE Gas Engines brand awareness
Communicate initiatives
(Magazine editorials,
Customer Seminars)
Product not fit for hot/humid
climate conditions
Redesigned specific engine
components (eg Intercooler)

21. Bangladesh… 09/10 turn-around
New Order Intake

22. Case Study 2:
Establishing a strong
Foothold in Russia

23. Russia
Capital: Moscow
Population: 140 million
Area: 17,075,200 sq km
Sales channel: 2 Independent Distributors
GDP (Market Exchange rate) USD 1.76 trillion
GDP (PPP) USD 2.23 trillion
Real GDP growth rate 6%
Inflation rate 13.9%
Current account balance USD 97.6 billion
Proven oil reserves 79 billion bbl
Oil production 9.98 million bbl/d
Natural gas reserves 1680 Tcf
Natural gas production 23 Tcf

24. Russia… 2012 distributor set up
Dist.1
Dist.4
Dist.3
Dist.2
t.b.d.
t.b.d.
t.b.d.

25. What did we face? How did we react?
2006 … only one distributor
for total Russia
Added 3 additional distributors
 2 more in pipeline
Imperfect alignment 
conflicts among distributors Clear regional split/responsibilities
Difficult access to customers
Build on existing brand
recognition,
branch out into flare gas

26. Russia…improved position but still some way to go
56
113
192
414
473
'04 '05 '06 '09 2012
• Segment growth driven by
availability of gas/ electricity
demand
• O&G industry… utilization of
APG (flare gas) to reduce
greenhouse gas emissions
• Still significant room for
improvement
Segment size and position
(MW)
= GE Gas Engines segment share

27. Case Study 3:
Early Entry into Indonesia

28. Indonesia
Capital: Jakarta
Population: 240 million
Area:
1,919,440 sq km (over 1000
islands)
Sales channel: 1 long-term distributor
GDP (Market Exchange rate) USD 496.8 billion
GDP (PPP) USD 932.1 billion
Real GDP growth rate 5.9%
Inflation rate 10,5%
Current account balance USD 2.5 billion
Proven oil reserves 4.37 billion bbl
Oil production 1.04 million bbl/d
Natural gas reserves 93.9 Tcf
Natural gas production 1.98 Tcf

29. Indonesia… how it used to be
30
44
47
'03 '04 '05
• appr. 50% of population has
access to electricity
• Huge gas resources available
• Expansion of gas distribution
Segment size and position
(0.3-5MW)
= GE Gas Engines segment share

30. What did we face? How did we react?
New country for GE Gas Engines Engaged local distributor,
with an Austrian connection
Gas engine technology rather
unknown – mostly utilization
of diesel engines
Created demand through extensive
marketing efforts (trade shows,
press releases …)
Distributor invested in local
infrastructure
(service, manpower,…)
Unstable public grid;
gas distribution
system under development

31. Indonesia… status after turnaround
30
44 47
145
164
'03 '04 '05 '06 '07
Segment size and position (0.3-
5MW)
Opening of first landfill project in
Bali (Dec. 2008)= GE Gas Engines segment share

32. Wrap up – Major Take Aways

33. 1) Building Global Infrastructure ….
Local People & Global
Operations
2) Innovation as a Process….
Adapt the product to local needs
3) Invest in Technology Leadership ….
Invest in Core and Develop
New Products
3 Major Lessons Learned