Officials with one of the world’s largest industrial equipment manufacturers, based in China, identified an opportunity to increase sales by offering leasing and finance solutions directly to customers. However, the manufacturer, like many Chinese companies, had little experience with this financial selling strategy and was unfamiliar with the options available for delivering financing.

The Alta Group’s senior managing director in China introduced the manufacturer to a team of Alta professionals who helped the company learn more about customer financing solutions and assess specific options, given the differences in Western and Eastern credit cultures.

Situation

The manufacturer had risen to the top of its sector in recent years, thanks to quality industrial products, effective distribution channels, and China’s phenomenal business boom. To prepare for the inevitable — flattening industrial growth in China — the manufacturer’s executives were considering new strategies to expand sales.

They began discussions with Jason Zhou, based in Beijing as senior managing director of The Greater China Region for Alta. Zhou knew that the manufacturer, like many Chinese companies, did not offer financing solutions directly to customers. The company relied upon its dealerships and bank relationships to help customers that requested financing, while other customers either paid cash or secured their own financing.

Alta, based on its wide experience, recognized that the manufacturer would eventually lose sales if the company did not provide financing solutions that increased the affordability and accessibility of its products. The manufacturer would also miss opportunities in other countries where customer financing not only is commonly accepted, but also expected.

“As China-based manufacturers seek to broaden their sales reach, especially beyond borders, they will want to explore how to couple financing as a part of the sales solution,” said David Wiener, an Alta managing director who played a key role in providing research and training to the company.

“They may need to do this through creating either a captive financing company, a quasi captive, partnering with a private-label vendor financing program, or aligning with a collection of suitable vendor and/or direct finance partners,” Wiener explained.

Solution

Five of Alta’s professional development and consulting experts in global equipment leasing and asset finance combined forces to help the manufacturer. These resources included Shawn Halladay, managing director of Alta’s Professional Development Practice; Alta Director Tony Mynsted and Wiener, who provided training as well as consulting services; Jonathan Fales, the senior managing director who serves as U.S. liaison to Asia; and Zhou, who initiated the engagement and served as interpreter.

Alta provided the manufacturer:

  • Customized research focused on the company and its market position;
  • An extensive overview of equipment leasing and asset finance, including opportunities and challenges within China, such as the country’s lack of credit reporting;
  • Tools enabling the manufacturer to independently assess financing solutions that may be possible for the company, given its market and location;
  • Hands-on training, timed with the company executive team’s trip to a U.S. conference, led by Alta professionals; and
  • A tour of a U.S. vendor oriented leasing company so Chinese manufacturing executives could develop a better understanding of the equipment leasing business.

“The manufacturer can use the training and background developed by Alta to determine if they want to form a captive finance company, or work with a private-label vendor partner, to offer customer financing,” Wiener explained. “And being able to get a tour of an active equipment leasing and finance platform and have a firsthand view of what a best-in-breed operation looks like was a real bonus for the company.”

Success

The manufacturer now has the knowledge to begin developing a sales aid finance program.   This program will enhance its sales efforts and could serve as a model for manufacturers throughout Chinese industrial markets. Once the manufacturer determines next steps, its equipment leasing and asset finance advisors at Alta are uniquely positioned to offer guidance and on-the-ground support.

Alta professionals can provide management consulting, including market entry services, as well as captive and vendor finance services, professional development, asset management services, mergers and acquisitions assistance, and legal support.  Alta provides these services not only from the U.S. and China, but also across North America, Latin America, Europe, the Middle East, Africa, and Asia-Pacific.