Caterpillar Announces Key Components Joint Venture With China Liyuan

BEIJING, Oct. 17 – Caterpillar (China) Investment Co., Ltd. (Caterpillar China), a wholly-owned subsidiary of Caterpillar Inc. (NYSE: CAT), and AVIC Liyuan Hydraulics Co., Ltd. have signed a joint-venture agreement to establish a company to design and manufacture medium- and heavy-duty hydraulic pumps and motors for the construction equipment industry. The joint venture will provide components for use in Cat products as well as third-party machinery and equipment. Hans Haefeli, Caterpillar vice president with responsibility for Advanced Components & Systems, and Jiming Zhu, Caterpillar vice president with responsibility for China, took part in the signing ceremony.

“We look forward to expanding our components presence in China through this venture and leveraging our expertise to become a leading supplier for Caterpillar and OEM customers in this growing market,” said Haefeli. “This strategic alignment will also enhance Caterpillar’s supply base and key component capacity in support of Caterpillar’s machine capacity expansion plans in China.”

Both parties bring expertise, technology and broad distribution capabilities to the joint venture. This new business will begin operations in Wuxi, Jiangsu Province, after receiving necessary government approvals.

AVIC Liyuan Hydraulics Co., Ltd., a wholly owned subsidiary of AVIC Heavy Machinery Co., Ltd. (600765.SSE), is the leading producer of hydraulic pumps and motors in China.

“We are looking forward to achieving our new enterprise development target through the cooperation, which will enable us to become an OEM and piston pump/motor supplier to Caterpillar, facilitating Caterpillar’s effort to localize production of key hydraulic components,” said Mr. Ji Suchun, general manager of Liyuan. “This alignment is also significant in serving the customer needs in China and reaching industry development.”

The Caterpillar / Liyuan joint venture, once approved by the applicable regulatory authority, will be the first key components joint venture for Caterpillar in China. Through this, Caterpillar China and Liyuan will support the Chinese government’s goal of equipment machinery industry revitalization by providing state-of-the-art technology and products.

“Over the last 30 years, Caterpillar has made significant investments in China to support a growing base of customers in the region,” Zhu said. “The joint venture is a clear indication of Caterpillar’s commitment to our customers and to the China market.”

“A good beginning is half way to success. I believe the alignment will lead to further and broader cooperation going forward,” said Ji.

About Caterpillar:

For more than 85 years, Caterpillar Inc. has been making progress possible and driving positive and sustainable change on every continent. With 2009 sales and revenues of $32.396 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. More information is available at: http://www.cat.com.

About AVIC Liyuan Hydraulic:

AVIC Liyuan Hydraulic Co., Ltd., a wholly owned subsidiary of AVIC Heavy Machinery Co., Ltd. (600765.SSE), is a professional enterprise to research and develop the military and civilian hi-pressure piston pump/motor. It is an authorized National High and New Tech enterprise for the national basic components industry.

Liyuan Hydraulic has successfully developed the products of 40 series 700 items to be widely used for the national aviation and spaceflight, engineering, architecture, mining, shipping, railway engine, metallurgy and agriculture machinery. It has a large sales and service network in the domestic market. The products are exported to North America, South America, Europe, Asia and beyond. For more information, please visit http://www.zhlyyy.com.