AGCO Corp. will open a plant to manufacture high-horsepower tractors and large combines in the city of Daqing in northeastern China.
The plant, AGCO’s third in China, will help the Duluth-based agricultural equipment manufacturer meet surging demand stemming from government incentives and farm consolidation.
AGCO is employing a two-pronged strategy in China, focusing on government procurement market in the north and private farmers in the south, Hubertus Muhlhauser, a senior vice president and general manager of Eastern Europe and Asia, told GlobalAtlanta last month during an interview in China.
In the northern Heilongjiang province, large state-owned farms need commercial tractors like those used in the U.S. and other developed countries. Since the technology isn’t available in China, the government is buying them from foreign companies in lots of 800-1,500, he said.
Through a series of government contracts, AGCO will have delivered more than 1,000 of its Valtra tractors to the Heilongjiang province by the end of this year. AGCO has established training programs to help farmers learn to use its tractors. The company is investing $50 million to set up the Daqing operation, Mr. Muhlhauser told GlobalAtlanta in September.
In Changzhou, China, the company is investing $100 million in a plant that will make low-to-mid-horsepower tractors for the Chinese market. The company will also develop the Changzhou operation into a sourcing and inspection hub as it ramps up the amount of parts it buys from China, Mr. Muhlhauser said.
A variety of factors make China a prime growth market for AGCO. The country has the world’s largest population but only 10 percent of its arable land. The government is investing in modernizing its farming equipment to boost efficiency and yields while decreasing its dependence on food imports, Mr. Muhlhauser said.
For more on AGCO’s China strategy, see: Atlanta’s AGCO Plows New Ground With China Investments