Caterpillar which is world’s biggest manufacturer of the earth moving equipment in terms of revenues, said that they overestimated the Chinese demand regarding the construction equipment. They have added the inventories there but now all of it is exported to other countries where the demand for them is tight.
Industrial bellwether has said it is expecting the demand for the construction equipment to go down for China in this year. It would be going down from the prior fore cast of the growth of about 5-10%, which is reassessment that shows difficulties that are facing the industrial multi nationals which have made large bets regarding Chinese economy.
China makes about ten percent of the business of Caterpillar’s for Asia & 3 percent of the over all sales. Development is pretty sharp reversal of the fortunes for company’s Chinese operations, which fuelled the profits in the recent years as the demand is sluggish for developed economies.
There is also the question of plan of Caterpillar’s for ramping up the capacity for China. This company has about 16 facilities in this country – and the recent one opened about last month – with 9 under construction, mostly all of them will open during this year. China workforce too will be doubled from the current level of about 11,000.