Interview: China strategically critical for Caterpillar

08:12, November 11, 2009      

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"China is a strategically critical market for us and our strategy has been to focus on competing for leadership in China," said Rich Lavin, a senior executive of Caterpillar Tuesday.

Caterpillar, the Chicago-based company is the world's largest manufacturer of earthmoving and construction equipment and a major global producer of diesel and natural gas engines and turbines. In China, Caterpillar products have been associated with the region's growth and development for many decades.

"We recognized the importance of China long time ago and have been very focused on Chinese market for many years." Lavin, who is responsible for Caterpillar China Division, told Xinhua during an exclusive interview.

Lavin is one the six group presidents who directly reports to CEO and president at Caterpillar Inc. He has responsibility for Caterpillar China Division, in addition to the company's Earthmoving and Excavation Divisions, Caterpillar Japan Ltd. (CJL), and Asia Pacific Distribution Division.

He is very pleased with the company's performance in China in 2009. "We have seen our businesses increase significantly over the course of the year. The third quarter shipment was the highest third quarter shipment in China ever," He said.

Lavin credited the recent incredible growth to their effective cooperation with the Chinese government on its stimulus package, which has shown real result in a short term.

According to Lavin, Caterpillar currently employs about 7,000 people in China, working at its nine offices, six manufacturing sites, two logistic centers and three R&D centers.

"That number has increased significantly over the past several years. And we anticipate within next five years, we will grow our manufacturing sites from 6 to more than 10 in China," he added.

China's domestic demand has started to become a driving force for its economic growth during global recession. Lavin saw it as a direct positive sign on Caterpillar's businesses in China.

He further stated, "With increasing domestic demand, the requirement for infrastructure will simply increase."

"Under the Chinese government's stimulus package, 500 billions dollars are dedicated just to infrastructure. We think the number will probably increase because as Chinese people consume more, their expectations will increase in terms of access infrastructures. That will have a direct positive impact on our business," he said.

When asked about China's position within Caterpillar's global business strategy, Lavin said, "In the context of our global business strategy, China is absolutely critical because it is the largest construction equipment industry in the world, and the mining equipment industry is going to grow aggressively over the next several few years."

He told Xinhua that Caterpillar's strategy is to focus on competing for leadership in China. "The company that leads in China will be the global industry leader. We are the global leader today and we intend to be the leader five years from now. We work with our teams to make sure we have a strategy in China that drives leadership," Lavin remarked.

Partnership with China is also very important. Lavin said, "We have been a very good partner with China in helping building infrastructure in China. We really look forward to being a closer partner, building infrastructures and really adding value to the quality of life in China."

Having traveled to China for many times over past 21 years plus living in China for six years, Lavin commented that the changes have been nothing short of dramatic in China over the last few years, and he expects the speed of investment and change will continue for the next 10 years.

He is very impressed by Chinese government's successful management of growth over the last few years. "They have done a great job. There has been very high level of growth and it has been very well managed by Chinese government," he said.

As far as the economic outlook is concerned, Lavin is very optimistic. He predicts that China's GDP will enjoy an 8 percent to 10 percent annual growth for the coming years, in spite of the global economic slowdown.

With such bright economic outlook in China, Caterpillar will further invest in manufacturing, invest in products, and also work with dealers to expand and improve their distribution and product supports, Lavin said.

"Our objective is to be the leader in China. None of this will happen if we don't have world class people on the ground in China leading our businesses. We have been extremely pleased with our people in China who will not only lead our China businesses but also lead our businesses around the world," he stated.

When commenting on President Obama's upcoming visit to China, Lavin said, "The fact that he is visiting China is a very good sign and clear indication of the importance of the U.S.-China relationship. Caterpillar is a strong supporter of free and open trade for many years. We continue to work with people at the administration to ensure that U.S. is encouraging free trade with our partners around the world including Asia pacific."

"It is very important to have a close cooperation between China and U.S., and for both parties to commit to free and open trade," Lavin added.

Source:Xinhua
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