Caterpillar digs into Chinese transition

Company proud to be part of China's growth story, says its chief

Doug Oberhelman has led Caterpillar Inc, one of the world's top construction and mining equipment makers, through an accelerated business cycle, implementing cost efficiencies and lean manufacturing.

The expansion of Caterpillar's global operation may be best epitomized in the rise of its business in China, which has evolved from equipment imports to technology transfers to setting up manufacturing facilities to a full business model.

Doug Oberhelman, chairman and CEO of Caterpillar Inc. Provided to China Daily

"We are proud to be part of China's growth story," says Oberhelman.

"Currently, we have 28 manufacturing facilities in China, four research and development centers, and three logistics and parts centers with more than 11,000 employees in total," he adds.

"We also have a strong dealer and supplier network in China."

Recently, Oberhelman spoke to China Daily about Caterpillar's business in China, future opportunities and challenges and his personal life. The following are edited excerpts from the interview.

Q: China's economy has slowed down in recent years. What has been its influence on Caterpillar China?

A: China is an integral part of Caterpillar's long-term global strategy and we are investing accordingly. As the Chinese economy and market evolve, the investment environment in China is also changing. The market is more open and competitive, which is healthy.

While China's economic growth rate has slowed, it is still among the highest global growth rates. The government is calling for a higher level of technology and innovation, industrial upgrading and environmental protection, which will bring more opportunities to the industries Caterpillar serves.

Q: Has Caterpillar brought its business and corporate values to China?

A: In China, Caterpillar is implementing its full business model. By enabling our customers' success, Caterpillar plays a positive role in promoting China's infrastructure development, energy efficiency, emission reductions and efficient use of natural resources. We are a responsible local citizen and our manufacturing facilities have become an industry benchmark regarding safety and quality, as well as people development.

We emphasize cultivating local talent - two-thirds of our leaders in China are Chinese. By sharing our corporate culture and advanced processes, Caterpillar has helped its suppliers improve their design capacity, manufacturing processes, quality and cost control. Some local suppliers have expanded their operations globally as a result.

Caterpillar is a responsible citizen in the communities where we operate and we invest significant time and resources promoting the health, welfare and economic progress of those communities. Caterpillar's contributions and leadership in corporate social innovation in China have been widely recognized.

Q: What kind of role do you think Caterpillar could play in facilitating communications and exchanges in China?

A: The United States and China are the two largest economies in the world, so it is important for them to have a positive and enduring commercial relationship. Caterpillar is a strong supporter of the conclusion of a meaningful and high-standard bilateral investment treaty between the two countries because it would benefit all that do business in China.

As a global company headquartered in the US and with significant operations in China, Caterpillar is in a good position to help strengthen the bilateral relations. For example, Caterpillar has been a strong supporter and active participant in the China Development Forum, which has provided a very useful platform for communication between China's policymakers and business leaders around the world.

This dialogue is very helpful for the outside world to better understand China and for strengthening China's economic cooperation with other countries, including the US.

Apart from economics and trade, Caterpillar is also a strong supporter of education and cultural exchanges between the two countries. We are proud to have been one of the first major donors to the 100,000 Strong Initiative launched several years ago to significantly increase the number of Americans who have the opportunity to study in China.

Q: What's your advice on doing business and building government relationships in China?

A: Understanding how to work effectively with the Chinese government is essential for success. It is important to align company strategies with the country's development priorities.

While China moves forward with reforms and significant transition in many areas, it is critical for business to stay abreast of current and planned regulations.

The government's proactive solicitation of business input on legislation is constructive and helpful for creating a better business environment as well as achieving governmental goals.

Q: What is the biggest challenge in doing businesses in China? Why?

A: A level playing field and a clear expectation for the implementation of policies and regulations remain difficult for global companies, but we haven't experienced a significant amount of difficulty in our competitive markets - Chinese construction machinery and engines.

Our local leadership has been efficient and productive in terms of serving our customers and creating dialogues with governments and industry regulators.

The industries we serve in China have been in decline on a year-on-year basis, but we see that as a natural transition. There will be ups and downs in economic growth as China shifts toward a consumer-led growth model, and we are optimistic about China's long-term future.

Q: What is Caterpillar's blueprint in China during the 13th Five-Year Plan that starts this year?

A: We will continue to implement our full business model and take advantage of the opportunities rolled out by the 13th Five-Year Plan that we believe will unleash further opportunities for Caterpillar, such as:

Supporting the development of emerging industries such as energy efficiency and environmental protection, smart manufacturing, high-end equipment and new energies and optimizing and upgrading the traditional industries.

Launching and upgrading infrastructure construction projects, including rail, road, airport, port and irrigation across China.

Implementing the Belt and Road Initiative to promote the connectivity of infrastructure of the Asian, European and African continents, as well as promoting the development of local industrial capabilities.

Speeding up the development of low-carbon and recycling industries to improve energy efficiency for sustainable and green economic development.

We are keen on sharing our experience and industry expertise with the Chinese industries in innovation, digital technology, manufacturing processes, sustainable growth and collaboration between industry and education.

Q: When did you first visit China?

A: My first trip to China was about 25 years ago. Beijing's modern development was just starting. Driving in from the airport, we drove under a big, arched welcome sign that did make me feel welcome! Beijing has expanded with people, infrastructure and opportunity in the years since. That big sign over the expressway is still there and it still makes me feel welcome.

It was about that time, more than two decades ago, that we opened our first manufacturing facility, in Xuzhou. Today that factory is one of our flagship excavator facilities, not only in China, but also the world. It is all because of the foresight and decisions made by our leaders before us and, above all, the hard work and vision of the Chinese people.

It felt as if the country was on a mission; it had - and still has - a vibrancy that's exciting to be around. I know Caterpillar is proud to play a small part in that.

Q: What are your hobbies?

A: My wife and I have spent several years turning our 1,200-acre farm, Quail Lakes, which was once a surface coal mine, into a vibrant home for endangered bird species, abundant wildlife and fertile farmland. To us, this is much more than a hobby. It's proof that our land, when treated responsibly, can have multiple lives.

junechang@chinadailyusa.com