Caterpillar Inc. last week signed a definitive agreement to acquire Shandong SEM Machinery Co., Ltd. (SEM), one of China’s key wheel loader manufacturers.

The acquisition is the latest step in a multi-year strategy introduced by Caterpillar in 2003 to significantly expand its presence in China. Under the signed agreement, Caterpillar will purchase a minority interest in SEM, with options to purchase the remaining equity after two years.

In conjunction with a signing ceremony, Caterpillar’s Asia Pacific Operations vice president Richard Lavin said, “In finalizing this deal, Caterpillar has reached another significant milestone in increasing our presence in China, better serving our customers here and becoming the leading provider of equipment to what now represents the world’s fastest growing construction equipment market opportunity. The strong relationship that has been built between Caterpillar, SEM and the Shandong Province further strengthens our foundation for growth in China.”

In addition to the SEM acquisition, Caterpillar continues to rapidly implement other aspects of its business model in China, including financing, logistics, distribution, procurement, rental and used equipment. Today, Caterpillar operates 10 facilities — both joint venture and wholly owned businesses — and employs approximately 2,000 people throughout China. The company distributes its products through five independent Caterpillar dealers, offering customers throughout China the best-in-class service and support that distinguishes Caterpillar’s distribution network worldwide.