High barriers and good profits, enterprises to accelerate the layout

The overall development trend of agricultural machinery in China is relatively stable, and the total power of agricultural machinery and the number of agricultural machinery have steadily increased in recent years. The total power of agricultural machinery refers to the sum of the power of various power machinery mainly used in agriculture, forestry, animal husbandry and fishery, which reflects the development level of agricultural mechanization in a region to a certain extent. In addition to the decline in the total power of agricultural machinery in 2016 due to the switch of agricultural machinery emission standards "Country 2" to "Country 3", the total power of China's agricultural machinery has generally shown an upward trend year by year, and the year-on-year growth rate in 2019-2020 is more than 2%. The number of agricultural machinery in China increased from 198 million in 2018 to 206 million in 2021, with a CAGR of 1.3%.

We believe that China's agricultural machinery scale expansion at the same time, there is also a trend of large and medium-sized, high-end, intelligent, this development trend will have a profound impact on agricultural machinery accessories, especially tires, will lead to agricultural machinery tires continue to large and medium-sized, while the various performance requirements of agricultural tires and production demand continues to increase. In March 2021, the "Guidance on the Implementation of agricultural machinery Purchase Subsidies from 2021 to 2023" announced the new subsidy standards for agricultural machinery purchase, and stressed that it is necessary to achieve "rise and fall", which increased the proportion of subsidies for urgent machinery and intelligent, complex and high-end products from 30% to 35%. It can be seen that the subsidy policy is tilted toward technologically advanced agricultural machinery products, and the future development prospects of intelligent and complex agricultural machinery products are broad.