Chinese agricultural machinery market the largest global supplier

The Chinese agricultural machinery market has improved greatly over the last few years, with these strides being predominantly attributed to the implementation in 2004 of a policy of subsidies for purchasing agricultural machinery. There have been a number of benefits from this policy.

Agricultural machinery power has increased at a compound annual growth rate (CAGR) of 6.2% between 2004 and 2011, increasing from 604 million kw in 2004, to 977 million in 2011. By 2012 total power is suggested to reach the 1 billion kw mark, which will realise the objectives of the 12th Five Year Plan.

Tractors are the most significant type of agricultural equipment in China, accounting for 30% of total demand in 2010. Large, high powered tractors have greatly benefited from the Chinese government's subsidy policies and will continue to see strong growth through to 2015.

China is now the largest global supplier of agricultural machinery. While their reputation for quality is not as high as that of their North American competitors, prices are attractive. North American companies are forming joint ventures with some of China's farm equipment manufacturing companies to hold a place in the global market.

John Deere, which is the largest agricultural machinery manufacturer in the world, possesses seven China-based production bases (including two joint ventures) located in Jiamusi, Tianjin, Ningbo and Harbin, and primarily produces tractors, combine harvesters, etc. On November 2, 2012, one of its subsidiaries, John Dcere (Harbin) built in July 2011, was formally put into operation.

YTO Group, the largest tractor producer in China, has famous brand named Dongfanghong. In July 2012, the core agricultural machinery subsidiary (601038.SH) under YTO returned to A share (listed on Hong Kong Stock Exchange in 1997, 00038.HK), and planned to invest RMB1.149 billion in high-power agricultural diesel engine project, Xinjiang agricultural equipment construction project, new-type wheeled tractor core competence promotion project as well as upgrading and expansion of fuel injection system products.

For more information on the Chinese agricultural machinery market, see the latest research: Chinese Agricultural Machinery Market

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