Clever Caterpillar Helps Friends in High Places

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While some are facing the heat from the powerful National Development and Reform Commission (NDRC) on account of their questionable interest in some of China industrial crown jewels, others are taking a more engaging approach.

Caterpillar is reported by Forbes to have signed a letter of intent with the NDRC “to help develop China’s remanufacturing industry…Under the agreement, Caterpillar will provide expertise to assist the NDRC and Chinese research institutions in developing China’s remanufacturing industry.” But what is remanufacturing? According to Caterpillar President, Stu Levenick, it is:

    “a highly sophisticated form of recycling that takes end-of-life components and turns them into like-new products for a fraction of the cost”

People’s Daily adds a note from Zhao Jiarong, director general of the Resources Conservation and Environmental Protection Department of the NDRC:

    “Taking the example of nearly one million end-of-life automobiles in China last year, Zhao said the large amount of used mechanical and electronic components in China under the country’s rapid economic development had offered favorable conditions to develop remanufacturing industry.”

The report also noted that “Caterpillar Remanufacturing Services is the first wholly owned foreign entity to receive a remanufacturing license in China”, and that it has opened a regional remanufacturing center in the Lingang Industrial Area of Shanghai.

While surely being a good deed, this also looks like a smart piece of positioning by Caterpillar – and with a very attractive government partner. It will be interesting to see what impact this initiative has on other parts of their business (such as in the newly launched equipment leasing sector). I guess we might hear more news of positive developments in the near future.

For any company operating in China, it is a good idea to consider how operations might usefully be leveraged in such a public affairs programme. Many big companies (who happen to have been seeking big deals, licenses etc.) have for many years provided placements and training courses for regulators, sponsored MBA’s for high-flyers in relevant departments, made donations to good local causes, and lobbied their home governments to look favorably on China-related issues. All of these activities can bring valuable long-term benefits, while also providing opportunities for positive engagement with local partners, regulators and communities.

While the Caterpillar tie-up with NDRC may lie at the top-end of the scale, there is a lot that smaller companies can achieve at local levels by being aware of policy issues – and by making innovative use of their time, expertise and budgets.

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(Updated 18/ 09/2006)

One Response to “Clever Caterpillar Helps Friends in High Places”

  1. Archive » Big Profits – But Who Should Get Them?| China Business Blog Says:

    […] ocal perceptions of their activities and their economic and social impact. A helping hand (such as that from Caterpillar) is likely to be viewed in a different light from a simple grab fo […]

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