In a second floor conference room at the Hanover fairgrounds in Germany during the Agritechnica machinery expo in November, a panel of experts got together to present their individual views on the present and future of the agricultural machinery market around the globe.
Despite the fact world demand for new machinery has slowed significantly, optimism was relatively high. In fact, it was high enough for one expert to suggest there is — or at least will be — room for as many as two more global, full-line farm machinery brands in the world market.
As the world’s ag journalists listened, the windows of our conference room opened with an impressive view of the 30 or so giant exhibit halls in which more than a couple of up-and-coming manufacturers were exhibiting their equipment, some of them making no secret of the fact they intend to occupy one of those new, full-line, global-brand opportunities of the future.
But competition for those spots will be intense.
In today’s market, it isn’t only the major brands that are delving into unfamiliar markets. Small- and medium-size manufacturers are also trying to grow their businesses in foreign markets, according to the managing director of the VDMA (the German Engineering Federation), Bernd Scherer, who participated in that expert panel discussion.
“If I look at the situation from the German manufacturers’ point of view, the small- and medium-size manufacturers are very active in many of these markets,” Scherer said. “There, I think the world has changed considerably; 15 or 20 years ago I don’t think any small- or medium-size company would have dared to approach any of the emerging markets and invest in them because the risks are considerable. Now look at how many small- and medium-size companies have invested in markets like Africa and China, because they expect returns.”
But if those ambitious small- and medium-size companies now dare to battle it out in foreign lands, another trend was also becoming obvious at Agritechnica; some of the manufacturers that are hoping to take on the world are brands few westerners have ever heard of.
Among them are Chinese companies looking to move west into markets in Europe as they, too, chase “global manufacturer” status.
Being a major player in all the world’s markets, however, means catering to a host of very different demands in markets where needs vary considerably.
“You can imagine that a farmer in a newly industrialized country, in Africa, in Asia, in China, has completely different requirements for a tractor than, for instance, a customer in Western Europe,” said Roger Stirnimann, a professor at the School of Agricultural, Forest and Food Sciences in Zollikofen, Switzerland, during the conference. “The customers in these emerging countries ask for simple, robust and reliable technology. Of course they also demand an appropriate price.”
“Maintenance is supposed to be simple so that everything can be done in the field,” Stirnimann continued. “This is also true for repairs. Everything should be quite simple. It shouldn’t require expensive tools. And last, but not least, (machines) shouldn’t be sensitive to different fuel qualities that might not be on the same level we are used to.”
To move into markets in the emerging countries, western tractor brands have built simple, lower-horsepower models that more closely resemble those that were in use on Canadian farms in the middle of the last century. For Asian manufacturers that want to be global brands, however, the challenge has been the opposite. It’s been to create sophisticated, higher-horsepower models that appeal to European and North American farmers. That means adding cutting-edge technology and advanced operator comfort features, not yet something their home markets demand.
All of this presents a much greater challenge than — for lack of a better term — dumbing down a machine.
At least two brands from China were making noises at the show about global expansion. One of them, Zoomlion, had clearly spent a bundle buying floor space to introduce new tractor models that are moving up into the mid-horsepower category. Zoomlion now offers models that surpass the 200-horsepower mark, well above the typical sizes that dominate Asian home markets, so clearly this brand is putting its R&D money where its mouth is.
To conquer the world, the logical first step for companies based in emerging nations whose machines offer limited horsepower is to move into Western Europe, where 200-horsepower machines still appeal to a relatively broad range of farmers. Eastern Europe and North America must then wait until the horsepower limits of their tractors grow along with their presence on the world stage.
But being taken seriously in the West means these Chinese firms are facing an additional challenge. Walk through exhibits from some manufacturers based there, and gaps in their plan for world domination start to become obvious. The inscrutable East seems to find the West equally difficult to understand. Mastering the subtle nuances of appealing to western consumers appears to be an art many haven’t yet come to terms with.
The displays of some Chinese exhibitors at Agritechnica seemed to have a lot in common with something you might expect to see at a street market vendor. Bright-yellow walls (a colour associated with social status, good luck and the earth in the Five Elements Theory within Chinese culture) often looked out of place, especially since they were plastered with poorly translated, English language slogans. They weren’t exactly stopping passersby in their tracks.
Even in some of the better turned-out Chinese exhibits, language translations were often poorly done. The language skills of many people inside the displays were even worse.
The overall marketing strategies of some Chinese manufacturers seem to miss the mark, too. Consider the Zoomlion brand name, for example. I suspect that name — or a literal translation of it — is culturally significant in China. The question is, will most western farmers just consider it silly? Farmers are likely going to be reluctant to write a six-figure cheque for a machine that doesn’t command their respect.
I can remember interviewing a Saskatchewan farmer several years ago, because he operated a farm fleet made up exclusively of ’70s-era, Soviet-built tractors. The brand did develop a small and loyal following here, but for the most part it failed to make major market inroads. Many potential buyers just wouldn’t take these tractors seriously. That particular farmer did, and he was willing to sacrifice the sophistication common to traditional North American brands in order to reap the low operating cost these tractors offered. But his comments during our conversation seemed to sum things up.
“They have to have good lights,” he said with a smile. “Why?” I asked, a little confused. “Because you only want to drive them at night when no one can see you,” he replied.
Learning to understand the subtleties of western markets is one major hurdle that up-and-coming brands from Asia and all emerging countries will have to clear before they can truly set themselves on a path to global status. Either that or they’ll need to build tractors with good lights.
What’s in a name?
In Europe, most tractor manufacturers have used model names for decades, just as North americans have used model names for their cars.
Now, we can expect to see more names for tractors and other farm equipment on this side of the atlantic too.
It’s because global companies are moving toward increased standardization of their equipment across all western markets. For example, Case IH has just added to its practice of naming tractors with the introduction of the new Optum line.
The name Optum is one of those made-up words companies are increasingly turning to instead of monikers that actually mean something, like Ford’s “Mustang” or Chrysler’s “Ram.” These days marketing bosses at Case IH aren’t alone in opting for mean-nothing names. It’s a trend european brands are embracing as more and more of their machines head off to foreign markets.
“The machines that were built during the beginning of our company history had relatively normal names,” said Gunter Leigers, a retired engineer at Claas, as he guided a group of journalists through the company’s factory in Harsewinkel, Germany in November.
“Names had a realistic meaning,” he continued. “Now, over three-quarters of our machinery is sold outside Germany. So, that gives you a problem with naming your equipment. If the translation of a name is not well done, people would either be laughing at you or not taking your equipment seriously. So that is why, more and more, we’re using artificial names, like Arion, Xerion and Lexion.
“One of the reasons is the problem of translating names. Chevrolet, for instance, built a small car named Nova. It might be a good name of a star in the sky, but in Spanish it can mean ‘it doesn’t work.’ Now, would you drive a car (with a name) that clearly says this car doesn’t work at all? That’s the reason we’ve decided in favour of artificial names and acronyms. but it’s always a problem finding a proper name for new machinery.”