A subsidiary of Caterpillar Inc. will be manufacturing critical component parts under a new joint venture proposed with AVIC Liyuan Hydraulics Co. Ltd., itself a subsidiary of Chinese hydraulic pumps and motors manufacturer AVIC Heavy Machinery Co. Ltd. The new company will produce medium- and heavy-duty hydraulic pumps and motors for construction equipment, including Caterpillar equipment.
Caterpillar has not indicated the size of its investment nor its share of the proposed venture, but the plan calls for the new company to start once it has gained “necessary government approvals,” at a site in Wuxi, Jiangsu Province.
Caterpillar (China) Investment Co. Ltd. (Caterpillar China) is the wholly owned subsidiary that will control the venture. Together, Caterpillar China and Liyuan announced that their venture would support the Chinese government's intention to build up its heavy equipment sector.
"Over the last 30 years, Caterpillar has made significant investments in China to support a growing base of customers in the region," stated Jiming Zhu, Caterpillar’s vice president with responsibility for China. "The joint venture is a clear indication of Caterpillar's commitment to our customers and to the China market."
"We look forward to expanding our components presence in China through this venture and leveraging our expertise to become a leading supplier for Caterpillar and OEM customers in this growing market," stated Hans Haefeli, Caterpillar vice president with responsibility for Advanced Components & Systems. "This strategic alignment will also enhance Caterpillar's supply base and key component capacity in support of Caterpillar's machine capacity expansion plans in China."