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John Deere tractor.
Deere & Co. said it plans to expand small tractor manufacturing in China by acquiring the Ningbo Benye Tractor & Automobile Manufacture Co. Ltd. located in Ningbo in southern China. Deere said it has signed a definitive agreement to purchase the Benye business and is seeking final review of the transaction by government approval authorities in China.
Deere said the acquisition will expand the product line offered to Chinese farmers and enhance its worldwide capacity to produce low horsepower tractors. Benye mainly builds tractors in the 20 to 50 hp range while Deere currently builds tractors in the 60 to 120 horsepower range at its current China joint venture tractor factory, located in Tianjin.
Benye, which was started in 1955, is reportedly the largest tractor manufacturer in southern China. It has a new manufacturing facility that covers 200,000 sq m, which includes research and development, manufacturing, and marketing. While 95 percent of the company`s current revenues come from sales within China, the company has exported tractors to 70 countries worldwide.
"We do have an ambition to grow both our domestic and export market in China," said David Everitt, president of Deere`s Agricultural Division in North America, Australia, Asia, and for Global Tractor and Implement Sourcing.
Additionally, Everitt said, there is a growing demand for smaller tractors in China because of the increasing mechanization by rice farmers. Deere anticipates that farmers with less powerful equipment will be upgrading to machines in the 20 to 50 hp range such as those built by Benye. Everitt said Deere expects to leverage Benye`s product range and manufacturing capacity for sales into other Asian, African, and CIS markets.
Financial details of the expected acquisition were not made public. However, Deere did report that it will create a wholly-owned subsidiary named John Deere Ningbo Agricultural Machinery Co. Ltd. to manage the business. The transaction is expected to close later this year.