Kubota Opts To Enter The African Market With Made-In-India Tractors
Kubota is planning to sell tractors produced at low-cost in India into African markets. Setting up a solid supply chain utilizing India’s low material and labor costs fortifies a significant share of the continent.
Setting up the goal of selling 5,000 tractors by 2028, Kubota aims to generate a total revenue of approximately 10 billion yen or INR 590 crores that year. Kubota strategically decided that rather than exporting materials from Japan, Kubota's Indian subsidiary would ship compact models to Africa's small-scale farms, which dominate the agricultural sector.
As per the records, Kubota has already established one of its subsidiaries in Kenya in 2017 but poorly struggled to build a reputation or good sales in the continent. Even the market share number stopped growing after a few percentages. The company has not yet decided to take a step back, as the statement of President Yuichi Kitao suggests “the African market will undoubtedly grow.”
The Japanese manufacturing industry has had mixed results in breaking into the African market. According to a survey conducted by the Japan External Trade Organization, roughly 30% of the roughly 80 Japanese manufacturers operating in Africa anticipate operating losses in fiscal 2021.
The Indian subsidiary of Escorts Kubota was turned into a subsidiary in April and will focus on shipping products to South Africa, Tanzania, and Nigeria, where the growth of agriculture is mounting.
As per the company, Tractor prices can be reduced by up to 30% if they are built in India rather than Japan, owing to lower material and labor costs in the South Asian country.
Ravindra Chandra Bhargava, chairman of Suzuki Motor of Indian subsidiary Maruti Suzuki, was chosen as an external director of Escorts by Kubota in July. Bhargava was instrumental in Suzuki's early entry into India and is credited with the company's high market shares. Kubota plans to use his knowledge to expand his market share in Africa.
Kubota hopes to leverage Escorts' established sales network in Africa, where many Indian immigrants work as agricultural machinery wholesalers. The goal is to increase its market share to slightly less than 20% by 2028.
The Japanese manufacturing industry has had blended results when entering the African market. According to a survey conducted by the Japan External Trade Organization, approx. 30% of the nearly 80 Japanese manufacturers operating in Africa anticipate operating losses in fiscal 2021.
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