Cummins and Kang Hao Electromechanical Joint Venture Power Generation Business

December 7, 2011, Beijing, China – Cummins Inc. (NYSE: CMI) and Xiangfan KangHao Electromechanical Co., Ltd. (KangHao Electromechanical) announced a 50:50 joint venture partnership. The joint venture company will develop, manufacture and sell power generation powertrains to China Power Generation Equipment OEMs based on Dongfeng Cummins Engine Co., Ltd. and Xi'an Cummins Engine Co., Ltd. engines. The joint venture company will be located in Liyang City, Hubei Province, and will be operational in April next year. The initial production capacity will be 40,000 units/year, which will be further increased according to market needs.

Mr. Cao Side, vice president of the Cummins Group, and Mr. Li Zuoyuan, chairman of Kang Hao Electrical and Mechanical Co., Ltd. signed a joint venture agreement in Beijing. The joint venture company will become the sole channel partner of Dongfeng Cummins and Xi'an Cummins Generator Powertrain in China.

In the view of Cummins, establishing the right strategic partnership in China is crucial to increase its market share and consolidate its leading position in the global dispersed power generation industry. China has a decisive position in the global dispersed power generation industry. Its diesel generator sets and natural gas generator sets account for more than 30% of the world's output. In addition, the rapidly growing Chinese economy consumes more than 10% of the globally produced generator sets each year.

The joint venture company will provide better value products and services for China's generator set manufacturers by combining complementary advantages. Cummins will bring its award-winning brand, leading technology and rich product portfolio. Kang Hao Electromechanical will bring its strong parts business and Chinese market channels. The cooperation will also benefit Cummins' two major engine joint ventures in China, Dongfeng Cummins and Xi'an Cummins, by broadening the market coverage and facilitating the export of power generator products.

"Combining Cummins Power Business and Kanghao's advantages in distribution channels and parts supply, the purpose of establishing a joint venture Cummins Power Technology Co., Ltd. is to further develop the power unit business for the Cummins joint venture between Dongfeng Cummins and Xi'an Cummins." Cummins Power China Manager Zhao Liujun said, “The new joint venture will provide better products, services, and brand positioning to customers of the Chinese generator set OEM, and achieve win-win development with partners and users. At the same time, we will also adopt the joint venture platform and Cummins Power's global network of channels jointly promotes the export business of Dongfeng Cummins and Xi'an Cummins Engines."

“We are very honored to have the opportunity to cooperate with seeing Mince.” said Xiao Xiao, Executive Vice President of Kanghao Electrical. “Canham is a fresh force in the Chinese power market, and Cummins is a global power leader. We have long-term cooperation with Cummins. The relationship has laid a solid foundation for the establishment of the new company. We firmly believe that a more solid partnership will use the advantages of both parties to better win the market.”