November 26, 2009

Agco to invest US$100 million in China

Agco Corp., a Georgia-based agricultural equipment manufacturer, will invest up to US$100 million in China in the coming years, including the construction of two manufacturing plants.

The two plants will produce agricultural equipment including tractors and combines, with construction due to start in the first half of 2010, said Hubertus Muehlhaeuser, general manager for Eastern Europe and Asia.

Agco plans to increase its tractor sales in China to 20,000 over the medium term from 400, he said.

The company also had a sales target of 1,000 to 2,000 combines in China, where it sells none at present, he said.

Agco expected its global net sales to fall 20 percent this year to US$6.6 billion.

In China, the company was looking to benefit from Beijing's efforts to expand mechanisation in the agricultural sector as farmers left the land and moved to cities. China is a huge potential market as its level of mechanisation is very low compared to that of North America, Europe and South America, according to Muehlhaeuser.

Farm vehicles made at the two Chinese plants, located in the provinces of Heilongjiang and Jiangsu, would be sold domestically and exported to North America, South America and Europe, he said.