China's transition from an investment-led to a consumption driven economy will impact the company's sales, Oberhelman said. But he added that the government's urbanization drive will continue to spur investment in public infrastructure - which could continue to support demand for construction equipment.
(Read more: China, Japan data in focus for Asia this week )
According to China's urbanization plan for the 2014-2020 period unveiled earlier this month, the government plans a major expansion of its transport networks and urban infrastructure as it seeks to increase migration from rural to urban areas.
Since China is the world's largest construction and equipment market, there's no question that Caterpillar faces more competition inside the mainland than anywhere else in the world, Oberhelman said.
"There are probably 100 makers of construction equipment we've identified. We have to be in this market to keep an eye on all the competition," he said.
"We know all of them, they watch us. It's not unlike Japan in the 70s, Korea in the 80s. We've got to be here to know the market and what Chinese companies really want," he added.
(Read more: Behind the massive bet against Caterpillar)
Oberhelman said in his lifetime, there is likely to be a Chinese manufacturer that emerges as a genuine competitor for Caterpillar on a global level.
—By CNBC's Ansuya Harjani. Follow her on Twitter