“Update: The China Equipment Leasing Market,” published in the October LJN Equipment Leasing Newsletter is a first-hand report from Jonathan L. Fales, an Alta director who chaired the China Leasing Summit in Beijing in June. His colleague, Adrian Pang, who heads Alta’s Asia-Pacific Region, contributed to the article.
Fales describes the Chinese leasing and finance industry as highly segmented, and lacking a single association to speak on behalf of the industry as a whole. This has impeded development of important tax and asset ownership policies that could accelerate equipment financing volumes and expand the industry. Without these changes, Fales foresees the industry morphing into two groups: big-ticket/China Bank Regulatory Commission-licensed lessors in one corner and everyone else in the other, with Fintechs playing a large role in the latter group.
Data reported at the June summit indicated more than 8,000 equipment leasing companies were operating in 2017, a 15 percent increase from the year before despite funding issues and lack of reliable credit information. Business volumes provided by Chinese sources for 2016 indicated RMB 5.3 trillion or more than $850 billion in US dollars. However, the authors reported that up to 90 percent of that volume represents sales-leaseback transactions to small and medium-sized companies.
Fintechs are expected to make major inroads in Chinese equipment financing markets. Fales notes, “China is already the world’s largest and most developed e-commerce market, accounting for 47 percent of global digital retail sales.”
Fales has been the chair of this annual summit for nine years.
The full article by Fales and Pang can be downloaded, courtesy of LJN Equipment Leasing Newsletter.
Learn about other Asia-Pacific hot spots in 2016 video interview with Pang.