Des Moines Register

02/02/06

Dealer hitches big hopes to little Chinese tractor

A Bevington man sees possibilities with the growth of small acreages and hobby farms.

By WILLIAM RYBERG

REGISTER BUSINESS WRITER

B evington, Ia. — As a television camera rolled, farm implement dealer Bill Mayer throttled up his Chinese-made Foton tractor, pulling a disc behind to churn up the soil.

The Foton's engine hummed. The disc dug into the dirt. The Foton rolled across a small farm field next to Mayer Farm Implements, a used-equipment dealership off Interstate Highway 35 in this tiny community about 15 miles south of Des Moines.

The action scene and others - with Fotons of various sizes - are destined to become part of a TV commercial designed to introduce the Chinese-made tractor to the land of Deere.

Mayer says he's prepared to spend $20,000 to $30,000 on his ad campaign. His 30-second TV commercial will be shown in March.

"We see a market niche here that's got big possibilities," he said.

The Foton is allowing Mayer to dream big in the small-tractor market, which has been growing along with small acreages and hobby farms. The machines are in the 20-horsepower to 80-horsepower range, smaller than tractors that do the heavy work in fields.

Mayer wants to position himself as a national Foton distributor, signing up other farm equipment dealerships to sell the machines and buy them through him. He already has deals with a few. He'll send his new TV ad to them to help drum up sales.

New imports are starting to establish themselves in the farm equipment business, said Stuart Birrell, an associate professor at Iowa State University. Their success will depend on how well they are able to create dealer networks to give customers confidence that parts and service will be available, Birrell said

The tractor also has made Bevington, population 60, one of the newer destinations in the international trade business.

Jeff Bussanmas, a member of the Bevington City Council, agrees that some would find that strange. But in today's world, it might not be that unusual.

"Anybody can do international trade. All they have to do is come up with the connections to do it," Bussanmas said.

Mayer stumbled onto the idea. He met a Chinese businessman through an acquaintance and began looking into the possibility of exporting used farm equipment to China.

He flew to China to explore the idea. Once there, his hosts tried to interest him in selling Chinese tractors in America.

The red-and-white Chinese tractor carries a price tag that, Mayer says, amounts to "sticker shock in the opposite direction" because it's so low.

A price comparison on 40-horsepower models, according to a Mayer print ad:

• Foton Model 404: $10,900.

• Case-IH Model D-40: $19,240.

• John Deere Model 4120: $23,899.

The price difference between a Foton and a Case "relates to the quality of our products," Thomas Witom, a Case New Holland spokesman, said in an e-mail.

Mayer says Foton quality is excellent. He said he's been in the equipment business for 20 years and has worked hard to build the dealership's good reputation. "I'm sure not going to bring in something that is inferior," Mayer said.

The lower price, he said, can be explained by such things as Chinese wages. Workers in the Foton factory earn about $1.10 an hour, a good wage in China, he said. Although reliable data from China don't exist, a 2004 Bureau of Labor Statistics study estimated the average factory wage in China was 64 cents an hour.

Mayer's Fotons are shipped from China in containers that arrive by ship on the West Coast, where they are hoisted ashore onto trucks for the trip to the Iowa dealership for some final assembly.

Mayer said he sold about a dozen Fotons last year, but the first tractors didn't arrive until summer, after the spring selling season had passed. This spring, Mayer will be ready with Fotons on hand and his ad campaign.

Steve Long of rural Colfax and a friend went together last summer to buy a Foton to share and use on the acreages they own.

"I like it so far," Long said.

Andrew Goodman, executive vice president of the Iowa-Nebraska Equipment Dealers Association, said the association encourages new companies to bring their products into Iowa, but advises its members to be sure that foreign companies have product liability insurance and a registered agent in the United States.

Mayer said Foton expects to have liability insurance in place by the end of the month and plans to set up a corporate branch office in Irvine, Calif.