This is another area where FDIs are welcome。
A Chinese honey pot for manufacturers
KEN WILSON
16 Jan, 2012 02:00 AM
MAJOR world agricultural machinery manufacturers are ramping up investment in China, with CNH Global the latest to declare its hand.
Last week, the company announced it will build a new manufacturing plant in Harbin, northeast China, with
an initial investment of $90 million.
Interestingly, the announcement came days after a report that
China is planning to spend a lazy $160 billion this year to increase agricultural development.
The move is also focused on increasing farmers' incomes, sending fleeting thoughts to cash-strapped WA farmers of a lifestyle move.
China's finance minister Xie Xuren, said the majority of the money would be spent on water projects to increase water availability for irrigation.
"The central government has also urged financial institutions to increase lending to agriculture-related businesses through incentive policies," Mr Xie said.
Apart from
CNH Global, other major manufacturers, including
AGCO and
John Deere, are positioning themselves in China, obviously keen to expand production of tractors, headers and sprayers.
According to CNH, its plans include a new factory to produce high horsepower tractors, combine harvesters and other machinery featuring advanced technology.
With this investment, CNH will expand its manufacturing base in China, where it currently assembles high horsepower tractors and other agricultural equipment in Harbin, and operates a manufacturing plant dedicated to low and medium horsepower tractors in Shanghai.
CNH CFO Richard Tobin, who will take over as president and CEO later this month, said China was an important market for the company.
"We strongly believe in its potential," he said. "CNH has invested in this country for more than 100 years, when the first International Harvester tractor was imported to China.
"We have since steadily developed our relationship with China and will continue to invest to ensure our customers have access to our best technologies and expertise."
CNH is a Chinese market leader in high horsepower tractors and harvesting equipment through its two agricultural brands, Case IH and New Holland Agriculture.
CNH is also present in China's construction equipment industry primarily through the distribution of Case excavators, backhoe loaders, skid steer loaders and other equipment.
The investment in a new manufacturing base will further strengthen CNH's position in China and will enable its agricultural equipment brands to contribute to the mechanization of the country's fast developing agriculture sector.
Meanwhile, China National Cereals, Oil and Foodstuffs Corp (
COFCO), the largest State-owned agricultural conglomerate, last week announced it was making steady progress in its overseas investments.
According to COFCO chairman Frank Ning, the company plans to build up its global logistics and processing systems next year, handling products such as corn, soybeans, rapeseed oil, sugar and wheat, Ning said.
"Some deals are now being negotiated," he said. "We will invest wherever it is necessary.
"We have laid the groundwork for expansion."
In November, COFCO announced plans to invest overseas through mergers and acquisitions over the next five years.
The company will focus on a number of foreign markets including the United States, Australia and Southeast Asia.
Mr Ning sees it as opportune to seek foreign acquisitions, particularly in an economic climate where cheaper investments can be made.
A growing COFCO will make it more competitive in the global food industry.
China is the world's largest importer and consumer of a number of agricultural products including cotton and soybeans.
Analysts have forecast the nation will become the world's largest food importer within the next five to 10 years.
According to the Ministry of Agriculture, China's agricultural trade surged to $122b in 2010 from $28b in 2001.
Domestically, COFCO has expanded to cover agricultural production, processing and retailing.
The company has so far cooperated with more than 1.55 million farming households.
The farmers grow crops on 233,000 hectares of farmland for COFCO's processing businesses.
"The farmers trust COFCO because we are a State-owned company," Mr Ning said. "This is our advantage in competition.
"We intend to foster a whole business chain from farms to consumers' tables, and we will continue striving to create value for farmers."
Music to the ears of overseas manufacturers.
A Chinese honey pot for manufacturers - State News - Agribusiness and General - Finance - Farm Weekly