The world's biggest construction equipment maker has signed a memorandum of understanding for co-operation with a local company as part of its multi-year investment plan in China.

Caterpillar Chief Executive Officer Glen Barton said the Chinese partner is Shandong Equipment Machinery Co in East China's Shandong Province, one of the leading wheel loader producers in the nation. But he did not reveal any further details.

"Caterpillar is also engaged in preliminary discussions with other Chinese producers of construction equipment and power systems, and we expect this could result in additional investments in the near future,'' Barton said.

He announced the investment plan on the eve of the World Economic Development Declaration Conference (WEDDC) in Zhuhai in South China's Guangdong Province.

"Subject to approval by China's government officials and the satisfactory completion of due diligence, these proposed investments should accelerate our expansion in the Chinese market, which represents the largest growth opportunity in the global construction equipment industry today,'' Barton said.

"I believe these proposed investments will take our company's construction machinery business an important step closer to a leadership position in China and contribute incremental sales to Caterpillar's overall (annual) sales and revenue target of US$30 billion this decade.''

The US-based company reported US$20.1 billion in sales and revenues last year.

Caterpillar now operates eight manufacturing joint ventures and wholly-owned firms in China, producing hydraulic excavators, compactors, diesel engines, undercarriages, iron castings and machinery components.

"Caterpillar expects to rapidly implement other aspects of the company's business model in China, including financing, rental and used equipment businesses,'' Barton said.

The company is also expanding its logistics services -- another key component of its business model -- in China through a partnership formed in June 2003 with Caterpillar dealer Lei Shing Hong, he said.

There is tremendous potential in China's construction equipment market, which is being driven by massive infrastructure, mining and energy projects throughout the nation.

Caterpillar is one of the major sponsors of WEDDC, which ends today.

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