Progressive Chinese Agrarians Choose Agricultural Machinery of Western Brands

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The article presents data from an annual report of the VDMA Agricultural Machinery (Frankfurt am Main).

The German Manufacturers Association of Agricultural Machinery (Engineering Union of Germany) the VDMA Agricultural Machinery is a leading branch-wise association of agricultural machinery manufacturers that includes more than 160 German companies and also companies of the world famous brands Ц the leaders of the branch, who produce innovative and Hi-Tech products in Germany. Only in Germany the Association unites companies with total annual trade turnover of И 10 billion with more than 30,000 employees.

The УFirm УRunoФ LTD is a marketing events partner of the VDMA Agricultural Machinery in the CIS countries. Especially for APK-Inform readers in June-July 2014 there will be published extracts from the Association annual report with data on volumes of manufacture, export, import of Asia, Europe, North and South America countries by results of the year 2013.

As a result of interviews with farmers, questioned within the frameworks of the Chinese market investigation in the year 2014, we can draw a conclusion that for Chinese agribusiness the efficiency, the reliability and the stability of the business processes become a priority. Extending of sown areas in enterprises, growth of crop capacity rates increase technological processes requirements.

Supplying with qualitative provision of growing population today is one of strategic purposes of the Chinese government work. To achieve that high purpose there was created and confirmed number of state programs aimed at support of local agricultural producer. They are reduction of prices for diesel fuel, for electricity, fertilizing and chemicals, and also direct subsidies for modern agricultural machineryand equipment purchasing. In 2013 these grants were increased for И 30 million, in comparison with previous year, up to total amount equivalent to И 2.56 billion. Depending on product segment, the state compensates no more than 60% of agricultural machinery cost. If foreign manufacturer of agricultural machinery and equipment wishes to see his brand in the list of agricultural machinery, that the state subsidizes when it is being bought, he has to show a defined level of production and additional cost localization in the territory of China. Inclusion in the catalogue and amount of available funding are determined by Chinese testing institute;subsidies are approved across various levels of the regional administration. There is a cap of CNY 50,000 (equivalent И 5,900) per machine. Grants from the public purse of up to 50% of the cost are available on harvesting machines, subject to a cap of approximately И12,000. These arrangements apply, first of all, to private owned farms and to co-operations. The state favours creating of co-operations, because population migration to cities is continued. The government is not interested in land to be fallow, that is why fields are leased to other farmers and depending on soil quality the rent is paid in natural form. Farmers-leaseholders unite into co-operations to invest into more powerful and modern agricultural machinery; it allows them to achieve lower cost price of productions. According to official statistics, today in China such co-operations number more than 31,000, which are called Уco-operative enterprisesФ. Some of them cultivate up to 2,000 ha of land.

Big agricultural producers purchase agricultural machinery through tenders, in which representatives of western manufacturers always participate. Decision-making process not always can be called transparent, but nevertheless sales volume of import agricultural machinery in China increases steadily.

It should be noticed that Chinese government could support favorable conditions for domestic agriculture development. It in turn created unique conditions for development of own modern agricultural engineering that is orientated to internal market needs satisfaction, that is unique by its volume, and also is orientated to agricultural machinery export to world markets.

State development strategy of local agricultural machinery manufacture was accepted by all leading international corporations, leaders of the world agricultural engineering. Such manufacturers of agricultural machinery as Case, New Holland, John Deere, Kubota, Mahindra&Mahindra have already practiced manufacture in China during last several years. The corporations AGCO and Claas also expand their participation at this market. German manufacturer of agricultural machineryClaas chose development way of its own brand Jingee for local market. In the whole, according to the VDMA estimation, Chinese market of agricultural machinery in the 2013 added 15% to its volume and achieved level of И 18.5 billion. The biggest growth level of 32.4% had place in a segment of self-propelled combines and was 55,600 units.

Vitalii Mietolkin

Web-portal about agricultural machinery market :

Translated by Natalia Dragnieva