Volvo CE sailing high on the winds of China growth

The United States-based Caterpillar Inc, the market leader, reported a 25 percent drop in fourth-quarter profit to $757 million and lowered its expected earnings for the full year due to weak commodity prices.

China's machinery industry expanded 9.4 percent and generated total revenue of 22.2 trillion yuan ($3.57 trillion) in 2014, according to data provided by the China Machinery Industry Federation.

The growth rate was 4.4 percentage points lower than the previous year.

The industry posted aggregate profits of 1.56 trillion yuan for the period, up 10.6 percent, but the gain was 5 percentage points lower than the previous year, mainly because of declining prices and shrinking demand.

Chen Bin, chairman of the federation, said that foreign companies still made more profit than domestic companies due to their technology advantage.

"Thus, their difficulties are lesser than the ones faced by Chinese firms."

He said the construction equipment sector saw a sharp decline in product sales because of China's weak real estate market last year.

Chen said that the rapid development phase of the machinery industry has gone and it will post relatively lower growth in the long term.

Weissburg, too, shares similar views but has a more optimistic outlook.

"This year will be even worse in terms of sales. But we will see an improvement from the second half of the year and this will continue on to 2016 also," he said.

"There are already enough indications that more opportunities are round the corner. China's financing system is evolving and developing. Property ownership policies are being revamped.

"In fact, China is seeing a major business transformation and most of it is what I would call as 'necessary changes'. "

For Volvo, it is not only a period of growth and learning, but also an opportunity to be prepared for the challenges ahead.

"We judge ourselves not just on how we perform in the best of our times, but also on how we fare during difficult times," he said.

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