Deere & Co. last week announced it will expand its presence in the world's largest and fastest-growing market for construction equipment by entering into a joint venture in China.
Deere said it has signed a definitive agreement to own 50 percent of Xuzhou Xuwa Excavator Machinery Co., Ltd. (XCG) — a subsidiary of Xuzhou Bohui Science and Technology Development Co. Ltd. (Bohui). The companies are seeking review of the transaction by government approval authorities in China.
“Today’s action provides Deere with a foundation in this important and rapidly expanding marketplace with an opportunity to leverage the expertise of XCG in China,” said Samuel Allen, president, Worldwide Construction and Forestry Division. “XCG is a leader in providing quality machines that perform to high standards for customers, which is a key to enhancing our construction equipment business in this growing market.”
XCG was viewed as a viable partner for the Chinese market because of its strong domestic position as a leading Chinese manufacturer of construction equipment with a broad excavator product line of 14 models. Currently XCG is the third-largest domestic excavator manufacturer in China with dealers covering all but two provinces of the Chinese market.
“Excavators are a vital segment of the construction equipment market,” Allen said. “XCG is well positioned to provide Deere recognition as a key provider of construction equipment in China.”
While Deere has a long-term presence in the manufacturing of agricultural equipment in China, this is the company’s first manufacturing operation in construction equipment in the country. Deere’s construction and forestry division is the world's leading producer of equipment for forestry and a leading provider of a broad range of construction equipment in North America, the company said.
Deere also has an important long-standing business relationship with Hitachi Construction Machinery Co., Ltd. a leading global manufacturer of excavators. The two companies manage a joint venture in Kernersville, N.C., producing equipment for the Americas supporting their joint marketing arrangement. This latest transaction will have no effect on the current relationship with Hitachi in the Americas. Deere said it remains committed to this relationship and continues to value its partnership with Hitachi.
Financial terms of the Deere-XCG transaction were not announced.
Headquartered in Moline, Ill., John Deere provides advanced products and services for agriculture and forestry, and is a major provider of advanced products and services for construction, lawn and turf care, landscaping and irrigation.