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Get rid of caterpillar XCMG let go of excavator business

get rid of caterpillar XCMG let go of excavator business

China Construction Machinery Information

Guide: 16 years after the establishment of a joint venture with caterpillar, the two companies broke up unhappily, and XCMG finally decided to withdraw from the joint venture completely, and then develop excavators independently. It was learned from Xuzhou Property Exchange yesterday that XCMG group plans to sell caterpillar (Xuzhou) Co., Ltd. for 1.58 billion yuan

after 16 years of establishing a joint venture with caterpillar, the two companies broke up unhappily, and XCMG finally decided to withdraw completely from the joint venture and develop excavators alone

it was learned from Xuzhou Equity Exchange yesterday that XCMG group plans to sell 15.87% equity of caterpillar (Xuzhou) Co., Ltd. at a price of 680million yuan. After the equity transfer is completed, XCMG group will no longer hold the shares of caterpillar (Xuzhou) Co., Ltd

"we said we would quit two years ago, when caterpillar proposed sole proprietorship. The reason why we have officially announced our withdrawal until now is that negotiations are needed during this period." An insider of XCMG group told China business yesterday, "although the money sold is not much, it is meaningless for XCMG to continue to hold shares in the joint venture."

as for whether to take over this part of the equity by equipping with the latest electronic control and advanced DCSP data collection and analysis software, the relevant person in charge of caterpillar China Public Relations Department told this newspaper, "if the company buys this part of the equity, it will make an announcement at that time."

however, a relevant person from the public relations department of caterpillar China previously confirmed to us that caterpillar did put forward the idea of sole proprietorship at that time

XCMG group proposed in the property right transfer announcement that other shareholders of caterpillar (Xuzhou) Co., Ltd. have the preemptive right, and the intended purchaser's main business is to produce and sell construction machinery in China and overseas markets, and should pay all the equity transfer price at one time. This is in line with Caterpillar's original idea

In October, 1994, caterpillar and XCMG established caterpillar (Xuzhou) Co., Ltd., the first joint venture in China to produce high-grade hydraulic excavators, which are more flexible, not afraid of folding and washable than 1-chip excavators as graphene textiles. At that time, XCMG and caterpillar jointly invested $82million, with a shareholding ratio of 4:6

according to the agreement of both parties, XCMG cannot produce excavators by itself after the establishment of the joint venture. However, the joint venture has been losing money in the first few years after its establishment. XCMG insiders explained that the main reason for the loss was that caterpillar used the joint venture to purchase core equipment from its foreign companies at high prices

taking advantage of this opportunity, caterpillar gradually increased its capital and shares to the joint venture. At present, XCMG vacuum insulation board not only has high tightening strength, but also has been diluted to 15.87% of the original 40% equity ratio of the joint venture. Wang Min, chairman of XCMG group, said in an interview in public, "although you can get tens of millions of profits every year, such a little dividend is meaningless."

according to the original agreement between XCMG and caterpillar, if XCMG does not withdraw, XCMG will not be able to produce excavators. This made XCMG lose the opportunity to develop excavators for many years

after XCMG group made up its mind to withdraw from this joint venture in 2008, XCMG group established its own wholly-owned excavator production enterprise - Xuzhou XCMG excavation machinery Co., Ltd

"excavators have the widest market space." Lu Juan, an analyst at Guotai Junan, said that excavators are the largest market segment of construction machinery and can replace loaders and bulldozers for construction operations on many occasions. Since the 1990s, the annual output of excavators in the world has been much higher than that of loaders and bulldozers

the domestic excavator market is growing extremely rapidly. In 1994, when caterpillar and XCMG established a joint venture, the domestic excavator sales volume was only 2150 units, but by 2009, the sales volume reached about 95000 units, an increase of 43 times in 16 years

XCMG has a planned production capacity of 30000 excavators, which have been sold externally at present. "It sells very well." XCMG said the insiders

although many foreign brands set up factories in China, tens of thousands of excavators are still imported from abroad every year, once accounting for 30% - 40% of the actual demand. In 2009, 21% of excavators were imported from abroad, and there is still a lot of room for import substitution

Lu Juan believes that there will be two phenomena in China's Excavator Industry in the future. One is that the share of local excavators will continue to increase, and with the maturity of the industry, the proportion will exceed 50%; Second, with the rise of local brands, the proportion of industry imports will continue to decline, and the self-sufficiency rate of core components will increase

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