A New Strategy Takes Effect Xinjiang Uygur Autonomous Region Has Deep Roots in Agriculture

With one market near saturation, a new strategy takes effect Xinjiang Uygur autonomous region has deep roots in agriculture and was one of the first parts of China where agricultural machinery was used. In fact, Xinjiang Boman Agricultural Machinery Company, a major agricultural machinery manufacturer in Xinjiang, has been so successful there that it now needs to find other areas of the country to sow its seeds. About 2,000 kilometers from the sea, Xinjiang is dry and has plenty of sunshine all year round, which is optimal for produce such as wheat, cotton, corn and grapes. Boman was born and bred in this territory. Set up in 2006, it is a subsidiary of Xinjiang Machinery Research Co, and sells products under the brand name Moshine. Over the past three years as mechanization has continued its march across the farmlands of China, Boman has watched its sales figures soar. Last year its revenue reached 380 million yuan ($60 million, 48.56 million euros), a rise of 52 percent on the year before. About 90 percent of that revenue came from corn and forage harvesters. Hao Yuejun, deputy general manager of Boman, estimates that revenue will reach 500 million yuan this year. The company is one of the largest agricultural machine makers in Xinjiang, and its sales accounted for one-third of the region's market last year. Some of that success, and the spoils that are ready to fall into Boman's basket, can no doubt be attributed to the fact that the company is simply making hay while the sun shines. "The government has decided to raise the machinery-harvest ratio of major crops such as wheat to 90 percent, from the current 30 to 40 percent, so the agricultural machinery industry has great market potential," Hao says. But there is only so much arable land, and in Xinjiang full cultivation potential has been reached in recent years. Almost every big farm has bought machinery, Hao says, and the Xinjiang market will be saturated within one or two years. Given that the machinery has a useful life of about 10 years, for the manufacturers the lucrative business of plant replacement remains a distant dream. That means it must look for markets further afield. That wider perspective is now showing up in its sales figures. In 2009 the company sold 180 machines, 40 of those outside Xinjiang; last year 600 machines were sold, half of them outside Xinjiang. Products sold outside of the region mainly went to Inner Mongolia autonomous region and Northeast China, the company says. Hao estimates that this year sales revenue from Xinjiang will account for one-fifth of the total, the rest coming from the other two regions. The company is also seeking to export. It plans to build a 3.3-hectare exhibition center at a land port in Ili Kazakh autonomous prefecture, in northernmost Xinjiang, to demonstrate Moshine products to potential customers in central Asia, and groundbreaking on the center will be done this year. Delivering machinery to Inner Mongolia and Northeast China is an expensive exercise, and the company has decided to open several factories in these major markets. "This saves 20 million yuan a year," Hao says. Hao says strong government support is one of the major stimulants for his growing business. According to the Ministry of Agriculture, the government subsidized agricultural machinery to the tune of 17.5 billion yuan last year, and it has pitched in 20 billion yuan so far this year to the end of last month. In some places subsidies for agricultural machinery can cover 50 percent of the price, Hao says. Besides best-selling products such as the corn harvester, Boman designs and produces machines for niche markets, including machines that pick cotton and pepper and unhusk walnuts. "Demand for these machines is not that great - only 10 to 20 units every year - but the profit margin can be as high as 100 percent," Hao says, adding that such machinery frees many laborers from the field, thus reducing overheads significantly. Manual pepper picking can cost 1,000 yuan a mu (about 0.07 hectares), but done by machine the cost is 400 yuan to 600 yuan. While imported machinery is better, Hao says, his company's products win the day in price and good after-sales service. For example, an imported cotton-picking machine can cost 3 million yuan, while a similar one from Boman costs 800,000 yuan. As for after-sales service, Hao says: "During the harvest season last month we sent 200 to 300 technicians to major agricultural areas in Xinjiang, and if we got a call from a customer we arrived at the site in an hour to save delays with harvesting." But on some counts machines fail to match their human counterparts, one of those being flexibility, and Hao says small adjustments need to be made to machines so they suit particular markets. "Even a plow needs to be designed for a local market, otherwise it cannot plow deep enough. We have to carefully study the local market before we enter it." Replacing human minds and hands with machines on the farm poses other challenges, too. For example, Hao says, unless cotton crops are spaced correctly and evenly, machinery can damage them during harvesting. Source: en.ce.cn