Page 326 - 2021 White Paper
P. 326
1 White Paper on the Business Environment in China
Farm Equipment to the decline in grain prices and lower return on
equipment investment. Although the subsidies per
The China Agricultural Machinery Market is machine have declined, the system is now more
projected to grow at a CAGR of 5.8% during the inclined toward large tractors, as the government
forecast period (2020 - 2025). China is one of the seeks to enhance productivity and the yields. In
largest manufacturers of farming equipment and northern China, high horsepower tractors are used
the largest market for agricultural machinery, on a large scale, as the farm sizes are generally
worldwide. Most of the agricultural machinery large, unlike in southern China, where farm sizes
industries are mainly concentrated in Shandong, are quite small. Large farm tractors are expensive,
Henan, Jiangsu, Liaoning, and Zhejiang provinces so many farmers outsource their cropping work to
and the bestselling types of agriculture machinery third-party contractors, who value the performance
in the country include large tractors and harvesting and profitability of their investment. In the Chinese
machinery products with high horsepower and agricultural machinery market, companies are not
high degrees of automation. China's agricultural only competing based on equipment quality and
machinery market is estimated to grow remarkably promotion but are also focused on strategic moves,
during the forecast period. All types of agricultural in order to hold larger market shares. New product
machinery used in fields, including harvesting launches, partnerships, and acquisitions are the
machinery, haying and forage machinery, and major strategies adopted by the leading companies
irrigation machinery and others have been in the market studied. Mostly the agricultural
considered with the research scope. The cost equipment industry in the country is dominated
of farm labor has a direct relationship with the by a large number of unspecialized manufacturers
percentage of the total population of a country producing low technology machinery. The top five
employed in agriculture, considering simple domestic manufacturers account for less than
demand-supply economics, thereby affecting the 25% of the market. Major Chinese agricultural
china agricultural machinery market. On average, equipment companies include First Tractor, the
developing economies such as China have larger YTO Group, and Changzhou Dongfeng Agricultural
percentages of the population dependent on Equipment (Modor).
agriculture. However, the percentages have
decreased over time as a large number of people In 2019, the total revenue of agricultural
are migrating to the urban area every year. Due machinery enterprises (each with annual revenue
to decreasing agricultural labor, the prices of farm over 20 million RMB) nationwide was 246.467
labor are rising. Hence, it is expected to increase billion RMB, a decrease of 4.43% over the previous
the demand for agricultural machinery during year, and the industry's profits were 10.339
the forecast period. Nearly 2,500 agricultural billion RMB, down 0.25% from a year ago. In 2019,
equipment manufacturers are concentrated only China produced 40,000 large tractors on a par
in the provinces of Shandong, Henan, Jiangsu, with that in 2018; 238,000 medium-sized tractors
Liaoning, and Zhejiang. Although the agricultural were produced with a year-on-year increase of
machinery industry is evolving technically, lack 17.2%; the output of small tractors jumped 3.7%
of human capital, the necessary infrastructure to year-on-year to 340,000 units; the harvester
develop sophisticated farming machines, which output was estimated at 255,000 units, a fall of
are able to compete with foreign products is 11.2% on an annualized basis. China is superior
some of the major factors restraining the growth in exporting agricultural machinery amid less
of the market. Due to this, China relies heavily on dependence on imported products on account
foreign imports for high-tech farming machinery. of ever better technologies about China-made
China’s agricultural machinery had been facing agricultural machinery. In 2019, China imported
several challenges, like overcapacity and low 10,945 agricultural machines and fell 9.1% from the
profit-margins, after the provision of a year-long previous year. At the same time, China's agricultural
subsidy scheme for promoting mechanization machinery exports in 2019 plummeted by 17.2%
in the farming, which led to the mass production year-on-year due to the depressed industry, the
of low-quality tractors. Farmers’ have become upgrading of National Emission Standards IV, and
unfavorable toward purchasing equipment due the Sino-US trade war. By the end of 2018, the
326
Farm Equipment to the decline in grain prices and lower return on
equipment investment. Although the subsidies per
The China Agricultural Machinery Market is machine have declined, the system is now more
projected to grow at a CAGR of 5.8% during the inclined toward large tractors, as the government
forecast period (2020 - 2025). China is one of the seeks to enhance productivity and the yields. In
largest manufacturers of farming equipment and northern China, high horsepower tractors are used
the largest market for agricultural machinery, on a large scale, as the farm sizes are generally
worldwide. Most of the agricultural machinery large, unlike in southern China, where farm sizes
industries are mainly concentrated in Shandong, are quite small. Large farm tractors are expensive,
Henan, Jiangsu, Liaoning, and Zhejiang provinces so many farmers outsource their cropping work to
and the bestselling types of agriculture machinery third-party contractors, who value the performance
in the country include large tractors and harvesting and profitability of their investment. In the Chinese
machinery products with high horsepower and agricultural machinery market, companies are not
high degrees of automation. China's agricultural only competing based on equipment quality and
machinery market is estimated to grow remarkably promotion but are also focused on strategic moves,
during the forecast period. All types of agricultural in order to hold larger market shares. New product
machinery used in fields, including harvesting launches, partnerships, and acquisitions are the
machinery, haying and forage machinery, and major strategies adopted by the leading companies
irrigation machinery and others have been in the market studied. Mostly the agricultural
considered with the research scope. The cost equipment industry in the country is dominated
of farm labor has a direct relationship with the by a large number of unspecialized manufacturers
percentage of the total population of a country producing low technology machinery. The top five
employed in agriculture, considering simple domestic manufacturers account for less than
demand-supply economics, thereby affecting the 25% of the market. Major Chinese agricultural
china agricultural machinery market. On average, equipment companies include First Tractor, the
developing economies such as China have larger YTO Group, and Changzhou Dongfeng Agricultural
percentages of the population dependent on Equipment (Modor).
agriculture. However, the percentages have
decreased over time as a large number of people In 2019, the total revenue of agricultural
are migrating to the urban area every year. Due machinery enterprises (each with annual revenue
to decreasing agricultural labor, the prices of farm over 20 million RMB) nationwide was 246.467
labor are rising. Hence, it is expected to increase billion RMB, a decrease of 4.43% over the previous
the demand for agricultural machinery during year, and the industry's profits were 10.339
the forecast period. Nearly 2,500 agricultural billion RMB, down 0.25% from a year ago. In 2019,
equipment manufacturers are concentrated only China produced 40,000 large tractors on a par
in the provinces of Shandong, Henan, Jiangsu, with that in 2018; 238,000 medium-sized tractors
Liaoning, and Zhejiang. Although the agricultural were produced with a year-on-year increase of
machinery industry is evolving technically, lack 17.2%; the output of small tractors jumped 3.7%
of human capital, the necessary infrastructure to year-on-year to 340,000 units; the harvester
develop sophisticated farming machines, which output was estimated at 255,000 units, a fall of
are able to compete with foreign products is 11.2% on an annualized basis. China is superior
some of the major factors restraining the growth in exporting agricultural machinery amid less
of the market. Due to this, China relies heavily on dependence on imported products on account
foreign imports for high-tech farming machinery. of ever better technologies about China-made
China’s agricultural machinery had been facing agricultural machinery. In 2019, China imported
several challenges, like overcapacity and low 10,945 agricultural machines and fell 9.1% from the
profit-margins, after the provision of a year-long previous year. At the same time, China's agricultural
subsidy scheme for promoting mechanization machinery exports in 2019 plummeted by 17.2%
in the farming, which led to the mass production year-on-year due to the depressed industry, the
of low-quality tractors. Farmers’ have become upgrading of National Emission Standards IV, and
unfavorable toward purchasing equipment due the Sino-US trade war. By the end of 2018, the
326
