Chinese Enterprises Plow Ahead in Africa's Farm Machinery Market

By QU XIAOLI

Africa has 60 percent of the world’s uncultivated land and millions of potential jobs in the agricultural sector, according to the World Bank and other institutions. Meanwhile, the utilization rate of tractors is only 10 percent and manual irrigation has been available on only four percent of cultivated land in Africa.

Although many African countries advocate developing agricultural mechanization and building farm machinery plants, few possess the capability to produce and assemble tractors. Most tractors in Africa are imported from overseas. Although some analysts cite Africa’s underdeveloped manufacturing industry as an impediment to economic development, it in fact provides opportunities for developing countries, like China, that have the capability of producing middle-end products.

Intensive Cultivation of African Market

Over the past few years, China’s farm machinery suppliers have paid increased attention to the African market. Africa is attractive to the engineering machinery industry because it has huge business potential.

As the birthplace of China’s first tractor, road roller and military off-road vehicle, the YTO Group Corporation has been in the African market since 1992. In August 2009, the YTO Group and China-Africa Development Fund (CAD Fund) co-established the China-Africa Machinery Corp, transforming the original pattern of pure import and export trade to the new operational model of trade first, followed by investment. Focusing on farm machinery and engineering machinery in Africa, the YTO Group has successively set up assembly plants and service centers in seven African countries – Algeria, Egypt, Ethiopia, Nigeria, Kenya, Angola and South Africa.

In addition to the YTO Group, Foton Lovol International Heavy Industry Co. has set the Middle East and Africa as its strategic markets. Chery Heavy Industry Co., Ltd. has also launched an “Entering Africa campaign.” It plans to invest US $260 million in three phases to build modern farm machinery operation centers in seven African countries. Those Chinese companies intend to provide package solutions to the development of African agriculture.

According to one of Chery’s overseers, the “Entering Africa” strategy is a response to the China-Africa Cooperation Forum and an important measure to vigorously explore overseas business and promote farm machinery development in African countries. After the campaign is launched, Chery will build sales and after-sales service centers in countries such as Zimbabwe. It will also actively customize products to suit local environments and boost the development of modern African agriculture.

Adapting to Local Markets

Many African countries are former European colonies, and the development of their farm machinery industy relies on government investment and international financial assistance. Because of historical ties with the West and its geographical vicinity, most farm machines on the African market were imported from developed countries such as the U.K., the U.S., Italy, France and Germany. Since the 1990s, Chinese-made machinery has gradually gained ground in the African market.

Chinese manufacturers provide custom-made farm machinery to meet local needs. As most land in Africa is uncultivated, wild tree roots and bushes pose a hazard to ordinary machines. To deal with this problem, YTO has engineered new disc ploughs which can easily cut through roots without damage to farm machines.

In another dilemma, YTO discovered that tapioca ground in its mills was too fine, which impaired its taste. YTO immediately redesigned its machines to produce a coarser flour, after which sales quickly picked up.

Upon receiving an order from Ghana, Shandong Wuzheng Group established a special project team to design, test, produce and ship farm vehicles to Africa. Chinese technicians communicated in depth with colleagues in Ghana on the details of the engines, cabs, underpan and containers, making improvements and special adaptations according to the customers’ needs.

Chery has promoted a differentiation marketing strategy to cope with the shortage of effective short-term demand. In addition to typical farm machinery, the company also produces more sophisticated machines, such as high-powered tractors. These machines meet the needs of regions with high requirements on machines for soil tilling and preparation.

Senior officials of the Republic of Congo visit a Chinese tractor factory on October 8, 2010.