The promising market prospects and broad development space have led construction machinery enterprises, which are under downward pressure and seeking a way out, to turn their attention to the agricultural machinery market. In fact, as early as 15 years ago, Foton Lovol entered the agricultural machinery industry and quickly gained a foothold with its wheat harvesters, achieving sustained development. Three years ago, Chery Heavy Industry expanded into the agricultural machinery market at lightning speed, launching a "special forces sniper battle" with an almost full range of products. Currently, construction machinery and automobile giants such as Zoomlion, Sany Heavy Industry, XCMG, Geely Group, and BAIC Group are planning to enter the agricultural machinery industry. Zoomlion has moved relatively quickly and has already established an agricultural machinery business unit; Sany Heavy Industry, though keeping a low profile, has completed several layouts in the agricultural machinery industry; and XCMG has already produced prototypes.

　　Broad Prospects for Agricultural Machinery Market: The New Golden Decade Not to Be Missed

　　In the past decade, China's construction machinery market has developed rapidly at an astonishing pace. However, since the second half of 2011, under the influence of macroeconomic regulation and overcapacity, the overall construction machinery industry has undergone significant adjustments. In 2012, the industry entered a period of medium-to-low growth, and there was no significant improvement in 2013; the overall recovery of the industry has been relatively weak. Taking excavators as an example, according to Wugu.com, the planned annual production capacity of Chinese excavator manufacturers is about 600,000 units, but in the first eight months of 2013, China's excavator sales totaled 83,500 units, 10% lower than the same period in 2012. It is expected that full-year sales in 2013 will decline by 5% year-on-year, and annual sales are predicted to be only about 150,000 units by 2015. Severe overcapacity in construction machinery, blind industry expansion, and extremely tight market funds have severely damaged investor confidence.

　　Meanwhile, the booming agricultural machinery market has become a good choice for construction machinery enterprises to emerge from the downturn and diversify development to avoid market risks.

　　At present, the agricultural machinery industry is in a period of opportunity for a new golden decade. The broad market prospects and development space have made China's agricultural market the last paradise for global agricultural machinery enterprises to compete. According to data released by the Agricultural Machinery Association, the market size of China's agricultural machinery industry grew from only 70 billion yuan in 2003 to 380 billion yuan in 2013, a 5.5-fold increase in 10 years, with a compound annual growth rate of 20.7%. It is expected to exceed 500 billion yuan by 2018. China has surpassed the EU and the US to become the world's largest agricultural machinery manufacturing country. While the achievements are encouraging, China's agricultural mechanization is still in its infancy, merely replacing human and animal labor in the fields with machines. According to statistics, in 2012 there were nearly 10,000 agricultural machinery enterprises nationwide, of which about 1,800 were above designated size, but the total industrial output value of these above-scale agricultural machinery enterprises was only equivalent to that of the US company John Deere alone. In addition to output value, the comprehensive mechanization rate of crop cultivation, planting, and harvesting in China still needs improvement. It is understood that in developed countries that have achieved agricultural modernization, the comprehensive mechanization rate is close to 100%, while at the beginning of 2013, the Ministry of Agriculture proposed a target of 59% for the national comprehensive mechanization level, indicating a large gap compared with developed countries.

　　However, only with gaps can there be room for development. Since China's main grain-producing areas have vast plains and concentrated arable land, it is very convenient to carry out agricultural mechanization operations. At the same time, developing agricultural mechanization can effectively address issues such as the reduction of rural labor force and the severe aging of the agricultural labor population. This year marks the 10th year of China's agricultural machinery purchase subsidy policy. As the state increases support for the agricultural machinery industry year by year, the agricultural mechanization authorities of each province (region, municipality, corps, and reclamation area) strictly implement the relevant systems for reviewing and distributing agricultural machinery subsidies, promoting the implementation of policies that strengthen agriculture, benefit farmers, and enrich rural areas, and coupled with the collective influx of machinery manufacturing enterprises into the agricultural machinery manufacturing field, it is conceivable that China's agricultural machinery manufacturing industry will enter a high-speed development mode in the future, while market competition will also become more intense.

　　Agricultural Machinery Industry Faces Reshuffling and Reorganization

　　The huge market space of China's agricultural machinery industry has not only attracted the attention of some domestic equipment manufacturing giants but also that of foreign giants such as John Deere, AGCO, Kubota, and Yanmar. They have established a presence in China through various means such as building factories, joint ventures, and mergers and acquisitions, and have entered the Chinese agricultural machinery market on a large scale.

　　Gary Collar, Senior Vice President and General Manager of AGCO's Asia-Pacific region, said: "The Chinese agricultural machinery market is large and is the center of world agriculture. In recent years, AGCO has gradually increased its investment in China, established a localized management team, developed a marketing network, and achieved sales growth, aiming to provide Chinese users with the best products."

　　With the entry of international agricultural machinery giants, construction machinery, automobile, and social capital, competition in the agricultural machinery market has shifted from price competition to multi-faceted competition involving branding, communication, public relations, etc. And "brand competition will become the focus of competition in the agricultural machinery market."

　　What is worrying is that domestic brands will be at a disadvantage in the fierce competition. Key products such as rice harvesters, rice transplanters, high-horsepower tractors, cotton pickers, and sugarcane harvesters are almost monopolized by international giants such as Japan's Kubota and Yanmar and the US's John Deere and AGCO, leaving increasingly less opportunity and space for domestic enterprises. It remains to be seen whether latecomers like Sany Heavy Industry and Zoomlion can target high-end key product areas, accelerate innovation through rapid resource integration, and achieve industrial breakthroughs.