More Notes from China: Lost in Collusion

by Mr Juggles

Held a meeting with the CFO of one of the largest construction equipment manufacturers in China. Their main business is wheel loaders.

Me: You and your competitors have very high margins, some are even higher than Catepillar (NYSE: CAT) which is the global leader. Is there any risk that as you all add capacity those margins decline?

Chinese CFO (through tanslator): Uh so he says that there is no risk of a pricing war.

Me: Ok can you tell me why that is?

Chinese CFO: Uh so he says China has 5 main wheel loader companies. And all are good companies and will not start a price war. Also he says the 5 CEOs of the companies meet every month for a dinner and they all agree not to make a price war against each other.

Me (to the translator): Did he really say that?

Translator: Yes.

Me: OK, moving right along.

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POSTED: 10/22/09 10:45 AM
Comment (2)


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Comments

  1. Anal_yst
    October 22nd, 2009 | 5:25 pm

    I’m not sure whether to be more afraid of that actually being what the CEO said or whether he actually believes it.

  2. Wanderer uber der Nebelmeer
    October 22nd, 2009 | 5:40 pm

    Is this for real or is it one of the best jokes you have had? I am afraid, you are not kidding!