The China and India are basically agriculture based economies and highly populated countries. The tractors and Agriculture Equipments requirement is also equally good. In view of this idea the world`s largest tractor maker Mahindra & Mahindra exited a Chinese joint venture last year. Now again M&M is planning to tap the $25 billion agriculture equipment Market in China.
The Global Farm Machinery Business is valued at about $94 billion, which is 50 percent more than the pure tractor business. And this farm machinery business, according to M&M, is expected to grow faster than the tractor business and may almost double in the next 5-7 years to $180 billion. M&M declined to share investment numbers, but asserted that the idea was to keep the model very asset light and build the business one step at a time.
Mahindra & Mahindra, the world’s largest tractor maker by volume that exited a Chinese joint venture last year, is planning to return to the $25-billion agriculture equipment market in that country.
This time, the company will be venturing on its own to the market, and focusing on the much larger farm machinery space and not just on tractors. In 2017, it had sold a 51 percent stake in China’s Yueda Yancheng Tractor for Rs 80 crore.
The China re-entry is part of Mahindra’s larger plan to generate over half its business from international markets, compared with 35 percent now. China is an important part of Mahindra’s globalization agenda, since it is one of the largest markets for farm machinery along with tractors, Rajesh Jejurikar, President for the company’s farm equipment business,
He said there was big potential for M&M to exploit the farm machinery opportunity in China with transplanters and harvesters that have been added to the company’s portfolio through its deals with Mitsubishi and Sampo-Rosenlew.
“The market is dominated by foreign brands than local companies giving us good opportunity for competing on product strength than on pricing, which is generally the case when you compete with Chinese players. Also, our wheat harvesters from Sampo-Rosenlew have a good market fit for the premium segment in China,” Jejurikar said.
