Cummins in China

Cummins Inc. is an American multinational company that designs, produces, services and distributes engines and related technologies such as electrical power generating, fuel, filtration, air handling and emission control systems. It is headquartered in Indiana, U.S.A. at the moment, it is asserted that this firm sells in over 190 countries and territories globally, through an established network of over 500 independent and company owned distributors and more than 5,200 dealers. In 2010, this firm reportedly made a net income of $1.04 on sales (Engardio & Arndt, 2005).

It is asserted that Cummins had already forged strong ties to its emerging targets, particular in China almost 30 years ago, even before other American multinational companies had done that. Presently, Cummins has branches in thirteen locations in mainland China that manufacture full line Cummins products. At its headquarters in Beijing, China, its talented and dedicated team manufactures emission solutions and light-duty engines. In Wuhan, at its East Asia R&D center, experienced engineers concentrate in developing power generation sets as well as fuel systems. Additionally, the company’s best and brightest employees work in Wuxi, Shanghai, Xi’an, Xiangfan and Chongqing. Prior to this, it was believed that China’s lopsided trade deficit with the United States would affect Cummins expansion ventures into China. Nonetheless, Cummins was able to ship engines worth over $400 in to China, annually. These figures were four times more than what Cummins imported from China. In fact, China’s booming markets absorbed all these engines immediately, and this culture has been maintained until today.

In China, Cummings saw an avenue through which it could expand and make more profit. As a result, the company decided to partner with like minded companies within China. For example, Cumming secured a 50 percent stake of Dongfeng, which is among the leading truck makers in China. Moreover, its Fleetgard Division also prides of a 50-50 venture with Dongfeng in Shanghai, where they manufacture fuel and air filters. Additionally, this company has partnered with Shaanxi Automobile Group to manufacture engines for heavy trucks (Engardio & Arndt, 2005).  It is apparent that Cummins eagerness to share ownership is extraordinary. There is an obvious reason as to why Cummings has decided to share ownership with such gusto. It is argued that Dongfeng buys over 70 percent of Cummins’ engines, and considering that Dongfeng is among China’s top truck makers, Cummins is assured of getting customers in China. Within three years, sales at the Xiangfeng venture shot from $63 million to over $554 million, thus yielding over $89 million in operating earning s for the American firm (Engardio & Arndt, 2005).

In a country where relationships are overriding, a partner like Dongfen can be invaluable. In fact, John Watkins, who was Cummins East Asia Managing director once concealed that working with such partners, was good because they were capable of speeding up approvals and working through the red tape, which helped Cummins to rump up rapidly. Since Cummins has the technology and products, it needs able partners so as to have easy access to the market. Such partnerships have also enabled Cummins to sell an array of engines and other accessories to local vehicle dealers and makers. Despite these successes, Cummins face fierce competition from mainland manufactures with improved quality and services. As a result, they have been able to undercut Cummins by almost 40 percent.  

In conclusion, due to the uncompromising efforts and dedication of its staff, this company has experienced immense growth over the years to become one of the largest and profitable engine manufacturers in China. Cummins can now produce the full line of its products including filtration, diesel engines, turbochargers, emission solution, fuel systems and more inside China.

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