Earlier this year, we noted that some of the large global companies were feeling the slowdown of the Chinese economy.
In the first quarter earnings conference call, Caterpillar (CAT.N) said that there were too much inventory in China, and they have been trying to reduce inventory level.
And how did they plan to deal with this high level of inventory in China? To export some of the machines from China to elsewhere.
So said the company during their Q1 earnings conference call when answering analyst’s question on how to deal with high inventory level in China:
One of the actions that we are taking is to export machines from China to other developing world countries that are actually in quite tight supply where we have essentially had dealers on allocation. So that is one of the things that we will do. And I think it is probably a safe assumption that we’re not going to be taking production up in China on excavators for the second half of the year.
And today, Reuters reports that Caterpillar is indeed exporting Chinese-made machines to elsewhere in the world:
Caterpillar Inc (CAT.N) has begun exporting Chinese-made machinery to the Middle East and Africa, part of a plan to offset a dip in China’s economic growth, a top official at the company said in an interview.
The move by the world’s largest maker of construction equipment is only temporary and the company still expects China to remain its fastest growth market, Richard Lavin, who oversees Caterpillar’s business in China, told Reuters.
Lavin declined to name specific countries in the Middle East and Africa where the Chinese-made goods are headed, or list the amount of product, but noted front-end loaders and excavators comprise the bulk of exports.
This article originally appeared here: Caterpillar exports Chinese overcapacity to the rest of the world
Also sprach Analyst – World & China Economy, Global Finance, Real Estate
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