Can Caterpillar Compete in China?

Last fall with Caterpillar purchase of Bucyrus, a large manufacturer of mining equipment strengthens CAT.

I have been searching about China's contract it had with P&H for mining equipment, What I understood it was a large order of multiple pieces of equipment and after one was delivered, China cancel or reneged on the contract and started building its own. Putting P&H already in dire straits in a even worst situation.

Competing against China be careful, for it is not a level playing field

Reading your comment, I am not sure if I should insert the upset Smiley, the angry or discouraged Smiley, or the unhappy Smiley.

I half expected to see a map of China at this Wiki article about reverse engineering. There seem to be are many complaints about this here at CR4; how much really goes on?

You would expect operators like GE, Boeing, Toyota et al to know what they're doing but they, and every other Western firm that goes to China is getting screwed.

No exceptions.

Their logic for dealing with thieves?

Better ask them, it's a mystery to me, and I'm Chinese.

Obama has just appointed the boss of GE as the US government's manufacturing advisor.

What kind of advice can someone who's being played like that give to a bunch of know-nothings in Washington?

It's the blind leading the blind.

Edwards is right to an extent - the right machine for the job will always beat a mob of lesser alternate machines.

Q 1. however is; do Caterpillar have the right machine?

Given the competitors products in the world context - I tend to doubt they do.

Most of their stuff is heavy, small footed, badly balanced and under powered, compared to the competition.

Cat was once "the most reliable"; but that went out the window decades ago, when the Japanese and Europeans got their QC under control.

So speaking as a person who has actually operated machines in this area - and pretending to be Chinese - I'd say Cat is low on the list of retro engineering choices, well below some other American manufactures - so quite safe.

I'd say Cat is low on the list of retro engineering choices, well below some other American manufactures - so quite safe.

I believe CAT realize this with their recent acquisitions, see #1

The Chinese handled the Wheat Gluten scandal (such as used in dog food) very effective and efficiently. I feel no remorse about thieves.

Only because it affected their export sales, too bad its not across the board

having worked for Caterpiller my feeling is Catepillar will buy chinees manafacturing companies and go-ahead ,Like what GE has done in elctrical engineering Market.

murali

I personally think the Chinese aim to put most everyone out of business and become the world's foremost producer of anything that can turn a profit.

Eventually, the Chinese market will "mature", Edwards claims.

I think this statement is a little naive. At some point people will get tired of using cheap Chinese equipment.........maybe.

I think for the Chinese, this is a bit of a game. I believe the Chinese will maintain a level of quality that will always insure that their products sell.

I don't believe that the Chinese are incapable of turning out high quality products............it's just that they know they don't have to........yet.

When the time comes, and becomes necessary, I think the Chinese will kick QC into overdrive, and turn out products that are as good, or better than anyone else's. They're very patient people and they don't want to freak out the rest of the planet by implementing this too quickly, IMO.

I personally think the Chinese aim to put most everyone out of business and become the world's foremost producer of anything that can turn a profit.

They will have other problems surface way before that happens, Employees health, Workers Rights (human rights for that matter) , Environmental, Political unrest.....

Human rights are something we worry about.........not them.

Employees health..............with 1.3 billion people, workers are expendable.

Political unrest.......don't think so, plenty of loyalists to squelch that......very quickly. How long did this last?

Environmental.......they will make sure the air and water are clean enough for workers to continue working......beyond that, not much. As far as reducing CO2 levels, good luck with that.

Randouli's comments are on the mark........the Chinese are constantly upgrading their ability to copy/steal other people's stuff.

Human rights are something we worry about.........not them.

1.) That's what is now, a journey begin with the first step. There is descent within the ranks.

Employees health..............with 1.3 billion people, workers are expendable.

2.) When debilating health issues reach a critical point (which is unknown at this time) 1.3 billion chinese are something to be recken with......if they turn against you.

Political unrest.......don't think so, plenty of loyalists to squelch that......very quickly.

See #1.

Environmental.......they will make sure the air and water are clean enough for workers to continue working....

Until the environment begins to interferer with high level government officials.

Randouli's comments are on the mark........the Chinese are constantly upgrading their ability to copy/steal other people's stuff.

I said this earlier......practice makes perfect. to bad its stealing other IP

But with that comes issues, when you copy or even reverse engineer, and engineer into the part is limited at best, but when you copy you also copy mistakes, and your future innovation suffers because you do not have practical experience in development..... only coping

I really hope you're right and I'm completely off the mark, I'd like nothing better.

in the mean time.......its still only my opinion....

A number of years ago, we sent an order for twelve 120 TON haul trucks to a coal mine in China. Eleven of the trucks arrived but the twelfth didn't show up till a year later. Shortly after, China came out with an orange color 100 metric ton electric drive truck. Several years later, on a trip to certify welders, I had the pleasure to be in XEMW to view structures they manufactured for our trucks in China. XEMW builds electric motors of any size and what better place could there be to build electric drive trucks, electric drive trains and submarine motors? In my walk about I found a perfect copy of an GE 776 wheel motor. Tooling was crude to say the least but they did a great job of reverse engineering with the exception of few unacceptable design changes. The haul truck was very similar to our first generation truck. Somehow it was decided that bulkheads in the side members weren't needed. Hoist pins didn't need fillets in machining. There were material changes in steel castings and the such. God only knows what they welded it with. Really there wasn't much need to be concerned because the truck wouldn't last 10000 hours. Can Cat compete in China? Sure. Reliability, dependability, service are still valid issues. Remember though, no matter how much China smiles and nods its head, it's still a very controlled society and always will be. It is not democratic in any form. Decision making still can be fatal

In my walk about I found a perfect copy of an GE 776 wheel motor. Tooling was crude to say the least but they did a great job of reverse engineering with the exception of few unacceptable design changes.

Practice makes perfect

"Can Cat compete in China? Sure. Reliability, dependability, service are still valid issues."

But, at what cost? If there substantial saving won't most go for compromise?

"Remember though, no matter how much China smiles and nods its head, it's still a very controlled society and always will be. It is not democratic in any form. Decision making still can be fatal."

But Decision making would be faster. Even most decisions are emforced...

Hi Randouli,

You visited China as I did and worked there. So, we can make realistic comments. However, many reflections and criticisms come from people read local newspapers and never went to see what's happening really in China.

VW started, do and will build cars in China, and I believe they are profitable. During the last 20 years or so, I did not see any copy of VW cars by Chinese. How come? Nobody in China wants to build a car and compete against VW? I am laughing!

I make waterbourne stains and sealers for over 6 years. I was not the inventor of any stain and sealer. The market asked for someone to do the way I do, deliver, and service, all that at very high price. When Chineses see a market badly served or no one care about it, they are ready to invade that market, and or because most of the time we are the buyers. They follow my principle: SELL, DESIGN, and BUILD, and only in that order.

"Remember though, no matter how much China smiles and nods its head, it's still a very controlled society and always will be. It is not democratic in any form. Decision making still can be fatal."

Your comment is acceptable. They are controlled to maintain a working and progressive society. Remember the uncontrolled Russia and Yugoslavia! Chinese government don't want to see chaos and explosion of a country. China was stable and stay that way. Decision making can be fatal but is true for anyone including the American industry. Already, we have the example of the automobile, television, cellphone, clothings and other appliances... We lost them because we don't want to work the way we supposed to do things. It's important to listen sometimes. Japaneses listened to Deming, Juran, and other Americans but no one American CEO lend an ear in the 1950s, isn't it? Don't tell me that Americans decision makers are not at risks? Please, don't make me laugh again! Everyone, every human group, every nation can make errors. Romains did, religions did, and in the future, it will be made by someone else again. 1,000 years ago Chinese were "number 1" in science and agriculture. However, during the last 500 years they did nothing progressive to humanity. They want to recapture the lost time.

I would like to read more comments from people know what's China really is and see on place them what and how they do things, Gil.

interesting, this is a littlte off topic.

I listen to public radio in the morning and last week it reprted it's people could not buy cabbage or onions. Could not afford it when just a few years ago because it was so cheap these were actually given away in promotions. Marketing......I guess capitalism isn't the only one that markets

Other staples were not mentioned and I do not know or believe that is the case across the board. What I know is the chinese do have a large variety to chose from.

Hi Phoenix,

Are you distributing compliments with "interesting, this is a littlte off topic" your sentence? I am ready to answer to the question: Caterpillar can produce equipments and compete on the world and Chinese market. Please, imform you about VW in China. What they did, do and will do to survive and sell cars? I don't have the answer but someone knowledgeable about it can do for us.

I buy Chinese stainless steel tanks at less than half price of American and Canadian quotations, and Chinese in plus are polished, being not included in other local quotes.

I remember, in the 60s, we get many things from Japan. They were low costs and cheap quality, including their first Toyota Corolla, 50,000 km and the engine was dead. Today, the story of a Japanese car is another.

I cannot predict success for Caterpillar. They have to do it, and do it successfully as did VW. I am sure that Americans can match the Germans. For success, Americans need to accept Chineses as they are and collaborate with them, Gil.

this with the Chinese topics have been going on for quite some time.

There are posts where I said their (China's) quality have been continuing to improve, and what they are doing, other industrial countries have done also at one time or another....including the US.

China's plan to modernize of been the most aggressive of all. And like all short cuts, a price will have to be paid one way or another.

Fact is, on a world market, any market, who ever is on top a market, whether its the US, China, Japan, Germany, there is only one way to go, and that is down and replaced with another. Its a cycle, and contradictory to another post here, very capitalistic.

Hi Phoenix,

Finally, we have a "nice and productive conversation" about a hot-topic subject: "Can Caterpillar compete in China?

In any marketplace we all have the "freedom" the sell, design, and build and/or produce what we want, isn't it? Success and failure are another issues! I, and I believe, no one has the answer concerning the success of Caterpillar in China or somewhere else. They have to do it and we get the result. My question is: Are they able to manage and do things as did VW?

Also, on the internet/blog/comments, we have to forget people hate another for some unknown reasons. It was nice to talk to you again, Gil.

Hi Phoenix,

Sorry, I get too old and missed your first sentence on the previous comment: "this with the Chinese topics have been going on for quite some time".

Just to tell for your understanding and in English (my English) that the original question "Can Caterpillar Compete in China?" was made about establishment of an American company in China, and can become successful in this country, isn't it? Beautiful! Now, you are on the same wavelenght, you can tell what you want because you and many others don't like written or verbal opposite opinions. There is nothing wrong with another brain acting differently. Every genious was against the current opinion. Attention, I am not a genious, OK! Different opinion can create some progress and I suggest to Caterpillar's future CEO or acting manager in China that VW's success must be studied seriously and completely, and used for the future adventure by them and others.

Did you see: My English is getting better without any help but keep my opinion in the opposite side! Have a good day, Gil.

When I saw that it was you had signed I felt it didn't warrant a reply because because you signed it, and we weren't too far off.

Topics like and about China can get side railed.

Yes your English is very good.

See you around, Gil

Heavy equipment manufacturer Caterpillar turned in extraordinary First quarter profits, states Agence France-Presse. The extraordinary $1.22 billion earnings outpaced last year's Q1 total by 426 %. Overall sales spiked 57 percent, to $12.95 billion. Here is the proof: Caterpillar records record $1.22 billion profit for Q1 2011