Cat slows China investment rate but remains optimistic

Caterpillar will likely slow the pace of its investment in China as a result of the construction slowdown in the country but said it remained optimistic about opportunities.

Speaking at Cat’s Bauma China press conference, Ed Rapp, Cat group president and CFO – who becomes construction industries group president in January – said the company’s level of confidence in the country was the same as 12 months ago; “The only change will be the pace at which we make the investment…the fundamentals haven’t changed, the opportunities will play out over the long term.”

Cat has 22 factories in China and work on another five is proceeding.

“The government has already made policy changes to promote growth and we expect to see more”, said Mr Rapp.

The company said the focus in the coming years would be to expand the business model to offer the full range of services offered in other markets, such as finance and its remanufacturing business. Cat’s finance arm has already provided US$1 billion of capital to businesses in China and this is expected to grow. Currently, China is dominated by retail sales, which represent 80% of the total.

“Yes, it slowed”, said Mr Rapp of the Chinese market, “but it slowed from a very fast pace and it is still by far the biggest construction equipment market in the world. We feel it will continue to grow in the next 10 to 15 years.”