China remains a place of opportunity for agricultural machinery enterprises
Confidence is more important than gold. Most people are optimistic about an industry in order for it to receive sufficient funds and valuable human and intellectual resources. An industry where resources and talents are constantly escaping is hopeless.To enhance the confidence of investors and talents in the agricultural machinery industry, it is necessary to tell the story of the industry well, so that investors and those who plan to engage in the agricultural machinery industry can see the future of the industry, understand the space and value of the industry, and only in this way can resources and talents be retained.
So after nearly 20 years of rapid development from 2004 to 2024, is China's agricultural machinery industry still a place of opportunity? Is it still worth investing in and dedicating youth and sweat to it? Is the agricultural machinery industry still a fertile ground for entrepreneurship?
1、 Policy support, agriculture in a major favorable period
Practitioners in the agricultural machinery industry must recognize that agriculture is currently and in the next 10 years or so, in an unprecedented period of significant dividends in history, which is closely related to the global political ecology, domestic macro environment, economic level, and industrial policies.
The dividend period of this round of agricultural policies began from the COVID-19 in 2020. The epidemic situation made the country and relevant government departments re recognize the importance of agriculture and the urgency of food security. Therefore, after the epidemic, the country's agricultural policies have undergone major adjustments, of which the most noteworthy is the importance of food rations and the production of the three major staple crops. The author calls it "food as the key link" in agricultural policies.
The author believes that currently and for a long time in the future, the country's agricultural policy orientation is "quantity oriented agriculture", with the core of the policy being "grain oriented", that is, the core of the policy is to increase grain production, and the basic means is to attach importance to the production of the three major crops of wheat, corn, and rice. Understanding the direction of this policy will increase confidence in the agricultural machinery industry and clarify the direction of future efforts.
The author also summarizes a rule: in the domestic market, whenever the planting area of the three major staple crops increases, the demand for agricultural machinery will increase. Conversely, whenever the planting area of the staple crops decreases and the planting area of non grain crops such as economic crops, flowers and vegetables, fruits and seedlings increases, the demand for agricultural machinery will decrease and consumption degradation will occur.
2、 In the intermediate stage of agricultural mechanization, popularization is an opportunity
Internationally, the development of agricultural mechanization is divided into three stages: primary, intermediate, and advanced. The comprehensive level of agricultural mechanization is below 20% -40%, which is the primary stage; Reaching 40% -70% is the intermediate stage; More than 70% are in the advanced development stage.
At present, the comprehensive level of agricultural mechanization in China is still in the intermediate stage. The so-called intermediate stage indicates that domestic agricultural mechanization is still in the popularization stage. The intermediate stage of agricultural machinery has the following characteristics:
Technological progress: With the continuous advancement of technology, new agricultural machinery and technologies continue to emerge, improving agricultural production efficiency and quality.
Specialization: Agricultural production is gradually moving towards specialization, and agricultural machinery is also correspondingly moving towards specialization. For example, machinery specifically designed for different operations such as planting, harvesting, irrigation, and fertilization.
Intelligence: With the development of technologies such as the Internet of Things and artificial intelligence, the level of intelligence in agricultural machinery is increasing. For example, precise positioning and intelligent control can be achieved through technologies such as GPS and sensors.
Environmentalization: With the increasing awareness of environmental protection, agricultural machinery is gradually developing towards environmental protection. For example, the promotion and use of energy-saving agricultural machinery can reduce environmental pollution caused by agriculture.
Service oriented: With the popularization of agricultural mechanization, agricultural machinery services have gradually become an emerging industry. For example, the development of service businesses such as agricultural machinery leasing and maintenance.
Sound regulations: The government's supervision of agricultural machinery is gradually strengthening, and relevant regulations and standards are constantly improving, ensuring the safety and quality of agricultural machinery.
Training and Education: With the popularization of agricultural mechanization, agricultural machinery training and education for farmers are gradually increasing, improving their skill level and safety awareness.
3、 Uneven regional development and diversified demand
Diversity leads to abundant opportunities, and gaps lead to business opportunities!
At present, the domestic agricultural machinery market still has the characteristics of rich and diverse demand. The economic development in different regions is uneven, and there are obvious levels and levels of demand. This imbalance and gap will generate potential energy in demand, which can breed great opportunities and opportunities.
The vast, complex, and vastly different market in China is uneven. In this market, it is a mature product, while in another market, it is entirely possible for it to be a new product; In one place, it is a sunset product, and in another place, it is completely possible to be a best-selling product.
Around 2015, 150 horsepower tractors were the best-selling models in Xinjiang and Northeast China. By 2018, 150 horsepower became the best-selling model in the Central Plains region, and by 2022, it became the best-selling model in the Southern region. This shows that the tiered demand in the Chinese market has provided many favorable conditions for enterprises to adopt a skimming strategy.
The imbalance in the Chinese market allows each industry to accommodate at least dozens of brands, rather than the three or five brands that Western theory tells us. The reason is simple: a province in China is equivalent to a country in Europe and America, and even a very large country. For example, the population of Henan Province is equivalent to three people in France. If there are only three or five brands in an industry, it is absolutely impossible to meet such diverse and diverse consumer needs. If in European and American countries, the result of competition in an industry can survive up to three to five brands, then in the entire China, an industry can survive at least a dozen or so brands.
The uneven regional development determines the hierarchy, structure, and diversity of domestic agricultural machinery demand, and diversity can accommodate more brands. Therefore, China is still an opportunity market for agricultural machinery, especially for small and medium-sized enterprises, which are still in the window of opportunity, and everything is possible.
The fate of a company is determined by the industry landscape, and once it enters a certain industry, the fate landscape of the company cannot be avoided. When fortune telling for enterprises and institutions, it is important to first tell the industry's fortune, as the fate of a company depends on the industry's landscape. The industry landscape is the overall environment for the survival of enterprises.
Generally speaking, the industry has four stages:
Phase 1: Cultivation period
There are very few companies entering this stage, but there will always be a few who dare to eat crabs, and they are the first batch of seed players. Seed players will benefit from the first wave of industry dividends, but they also have to bear the heavy responsibility of product research and development, supply chain building, user education, and market development. However, at this stage, there are few competitors, supply is in short supply, and the company's profits will be considerable. In addition, the competition is not fierce, and the company's life is also easy.
Phase 2: Rapid growth period
At this stage, market cultivation has been completed, industry opportunities have been exposed, and a large number of competitors have flocked in. At the same time, a large number of competitors have brought a lot of resources, and competition has begun to intensify. However, the overall competition is not fierce. The main task of enterprises is to quickly expand production capacity and seize market opportunities. Generally, the number of enterprises in this stage is the highest.
Phase 3: Stable period
At this stage, it can be said that "half is flames, half is seawater.". On the one hand, the industry maintains an unprecedented large-scale market capacity. Although competition is fierce, as long as every enterprise strives to have food to eat, and at the same time, with the power of competition, some enterprises have also developed some segmented market demands; On the other hand, the industry is becoming increasingly crowded, and some leading companies are beginning to have the energy to step forward and integrate the market. At the same time, the huge scale is attracting unknown cross-border players from other industries. With the passage of time, the industry is becoming increasingly crowded, and when large enterprises shuffle, market share will also begin to concentrate, and some people will start to fall behind.
At this stage, demand begins to shrink, especially as industrial policies may undergo significant changes. Most companies in the industry are no longer able to eat enough, resulting in two outcomes: first, the industry begins to undergo a fierce reshuffle, with a large number of small and medium-sized enterprises withdrawing from the market and market share rapidly concentrating on top companies, leading to the formation of oligopoly or absolute oligopoly; Secondly, enterprises attach greater importance to innovation. Some companies may create a second growth curve or open up new channels, leading to disruptive innovation and the emergence of industry disruptors. The industry is about to enter a new cycle.
So what stage is the domestic agricultural machinery industry at? At present, major industries such as tractors, combine harvesters, transplanters, rotary tillers, micro tillers, and plant protection drones have entered a stable period (vibration period), while sub industries such as dryers, balers, precision seeders, and automatic navigation are still in a growth period. However, overall, the domestic agricultural machinery industry has entered a stable period.
The stable period refers to the emergence of strong leading enterprises in the industry, with market share beginning to concentrate, but without forming a monopolistic pattern. For small and medium-sized enterprises and newly entered enterprises, there is still an opportunity to stand out, such as Yituo Group, Weichai Lewo, and Wode Agricultural Machinery, which are already billion level enterprises. However, the total sales value of domestic agricultural machinery is about 150 billion yuan according to small caliber calculations and about 550 billion yuan according to large caliber calculations, The combined market share of the three large enterprises is 20% and 5%, indicating that there is no absolute leading enterprise in the domestic agricultural machinery industry, no real oligopoly has emerged, and the competitive landscape is not yet solidified. For small and large enterprises, it is an opportunity. Large enterprises need to continue to scale up and increase their market share, while small enterprises can quickly scale up and increase their market share before the industry is solidified.
5、 Opportunities for import substitution and substitution
In 2023, the total amount of agricultural machinery imported into China through European, American, Japanese, and Korean countries is about 15 billion yuan, with exports of about 80 billion yuan. The main imported products are tractors with a power of over 200 horsepower, large combine harvesters with a feeding capacity of over 12 kilograms, CP770 large cotton harvesters, as well as high-end silage combine harvesters, large balers, and high-end precision seeders.
Although the import value is only 18% of the export value, the profit from exporting goods worth 15 billion yuan is much higher than the value of exporting goods worth 80 billion yuan. This is because domestic exports mainly consist of low value-added agricultural machinery, while imports are of high value-added, high-tech, and high premium agricultural machinery.
But domestic agricultural machinery already has the conditions for high-end agricultural machinery replacement. For example, the domestic replacement of cotton pickers has been completed, and now in the Xinjiang market, domestic cotton pickers can completely replace the CP770 imported by John Deere. The process of imported replacement is the process of upgrading domestic agricultural machinery technology and manufacturing capabilities. Domestic high-end agricultural machinery will definitely achieve the process of replacement, replacement, and return to the European, American, Japanese, and Korean markets.
6、 New technologies and tracks endow the era with new opportunities
The new technologies nurtured by the agricultural machinery industry are already restless in the mother's body, just like babies about to be born.
New technologies and new tracks will inevitably create new demands, and at the same time, the new track will inevitably give birth to new industry leaders. Without the burden of innovation, China's agricultural machinery industry may also surpass top enterprises in Europe, America, and Japan on the new track.
The author is very optimistic about the two new tracks of intelligence and new energy.
The new energy track focuses on electric agricultural machinery. Although there are different energy routes for new energy agricultural machinery, such as electric, hybrid, hydrogen, methane, and natural gas, the author believes that pure electric agricultural machinery is the most promising. Although with the continuous improvement of the electric industry chain in the automotive and construction machinery industries and the continuous upgrading and optimization of "three electric" technologies, domestic electric agricultural machinery will inevitably rely on these mature industrial foundations to develop rapidly.
Intelligence will definitely be combined with electrification. Electrification is the engine and best partner of intelligent agricultural machinery. The combination of electrification and intelligence will create greater infinite possibilities for the domestic agricultural machinery industry. In the future, new forces in agricultural machinery will inevitably be new species with intelligent, digital, and electrified attributes.
The future has arrived, but it has not yet become popular!
7、 New methods, new tools, new weapons, all businesses are worth doing again
People love new things, but where does new come from without the old? Users may not need new things, but businesses can use different methods to redo old businesses, and the logic behind this is efficiency and cost.
The author has always believed in two laws of the agricultural machinery industry: high efficiency defeats low efficiency; Defeat high costs with low costs!
The era has endowed the agricultural machinery industry with new methods, tools, and weapons. In the era of intelligence, informatization, and digitization, agricultural machinery enterprises can completely use new methods to transform traditional businesses. In fact, the needs of users may not have changed, at least the basic needs have not changed. Only the methods and models of doing business need to change, and the basic logic of change is to improve efficiency and reduce costs.
On the first level, the most useful tool for improving internal operational efficiency and optimizing costs is lean management. If a company can provide better quality and more powerful products at the same price, it will be in an advantageous position in competition; Enterprises can produce products of the same quality at lower costs and provide them to users at lower prices, placing them in an advantageous position in competition.
On the second level, considering efficiency and cost from the perspective of users, enterprises providing users with products with higher efficiency, better quality, and more competitive prices are undoubtedly invincible in the market. In fact, enterprises
