China’s construction machinery industry giants are launching a new round of competition in the field of agricultural machinery.
On June 2, XCMG and ZF Group officially signed a joint venture agreement in Friedrichshafen, Germany. The two parties will jointly establish “ZF (Xuzhou) Machinery Co., Ltd.”, headquartered in Xuzhou Economic and Technological Development Zone, Jiangsu.
The new company will focus on the localized R&D and production of advanced power-shift transmission systems for agricultural machinery, tailor-made local solutions for the Chinese agricultural machinery market, and accelerate China’s agricultural technology innovation.
Not long ago, Zoomlion also stepped up its efforts in the agricultural machinery track and established Hunan Zoomlion Agricultural Machinery Co., Ltd. to promote the upgrade of agricultural machinery products from single equipment to “complete product solutions”.
The two giants have successively increased their investment, and the strategic picture of construction machinery companies entering the agricultural machinery field has become increasingly clear.
Why has the agricultural machinery track become the “second battlefield” for construction machinery giants?
Its importance can be seen from the fact that it has been written into the Central Document No. 1 for many years.
The No. 1 Central Document of 2025 emphasizes stabilizing grain sown area and increasing yields, and clearly states “support the development of smart agriculture and expand application scenarios of artificial intelligence, data, low-altitude and other technologies.”
In 2026, the Central Government’s No. 1 Document continues to increase the upgrading of the agricultural machinery industry and clearly deploys the research and development and promotion of high-end intelligence, suitable for hilly and mountainous areas, and forestry and grassland agricultural machinery.
These measures herald an increase in the total demand for agricultural machinery and an upgrade in demand for more advanced and intelligent agricultural machinery.
Looking at construction machinery, in recent years, with the intensification of industry competition and market saturation, many companies have begun to seek new growth points, and the agricultural machinery industry has undoubtedly become a high-profile cross-border field.
In 2011, Zoomlion established Zoomlion Agricultural Machinery Co., Ltd. and acquired Chery Heavy Industry in 2014, marking the construction machinery industry’s first shot at entering agricultural machinery.
Next, China Railway Construction Heavy Industry in 2015, Liugong in 2016, XCMG in 2020, and Lingong in 2023 successively added new agricultural machinery manufacturing business segments and entered the agricultural machinery field.
Construction machinery companies frequently invest in agricultural machinery. This is not a simple attempt. There is a clear market logic behind it.
In terms of market size, China’s agricultural machinery market ranks first in the world.
According to data from Zhongyan Puhua, the domestic agricultural machinery market has exceeded 500 billion yuan and is expected to grow steadily to approximately 700 billion yuan by 2030, with an average annual compound growth rate of 5%-7%.
The driving force for growth mainly comes from the upgrading of existing equipment (high-end agricultural machinery, smart agricultural machinery) and incremental demand from weak links and emerging fields.
From the perspective of industry cycles, there is a certain complementarity between construction machinery and agricultural machinery.
The construction machinery industry is highly cyclical and is significantly affected by macro factors such as infrastructure investment and real estate; while agricultural machinery is linked to rigid needs such as food security and farmland protection, and is highly policy-driven, with relatively gentle fluctuations.
Taking agricultural machinery as the second growth curve will help engineering machinery companies smooth cyclical fluctuations and enhance their ability to resist risks.
From the perspective of technological synergy, construction machinery and agricultural machinery are highly connected in areas such as power systems, hydraulic control, transmission technology, and intelligent driving.
The R&D capabilities, supply chain systems and manufacturing processes accumulated by XCMG, Zoomlion and other companies in the field of construction machinery can quickly migrate to the agricultural machinery sector. This is the core confidence for construction machinery giants to enter the agricultural machinery field.
In addition, China’s agricultural machinery is undergoing profound changes, transforming and upgrading in the direction of large-scale, high-end, and intelligent.
XCMG’s cooperation with ZF, the global leader in transmission technology, means that domestic construction machinery giants are taking agricultural machinery as an important growth engine and taking breakthroughs in high-end core components as a starting point to compete for a new track in the modernization of agricultural equipment.
For the global technology company ZF, this joint venture to further expand the localized production of advanced power shift technology is in response to the huge incremental demand released by the upgrade of China’s agricultural machinery.
The frequent entry of construction machinery companies will not only bring about a new competitive landscape, but will also promote the acceleration of technological innovation in the agricultural machinery industry, intensify market competition, and accelerate industry integration.
On the one hand, the financial strength, technical reserves and human resources brought by these enterprises will accelerate the process of domestic substitution of high-end agricultural machinery and break the monopoly of foreign brands in the high-end market.
On the other hand, the construction machinery industry’s mature supply chain management and large-scale manufacturing experience are expected to reduce the manufacturing costs of high-end agricultural machinery and accelerate China’s smart agriculture to the forefront of the world.
