Keep an Eye on China, Advises Alta Consultant
Media Contact:Susan Carol, APR
540-361-1274
sca@scapr.com
Lake Tahoe, Nevada, May 21, 2009—Jonathan L. Fales, a principal of The Alta Group, is advising Western equipment leasing and finance executives to keep an eye on the Chinese market. While survival and funding are the focus of most Western lessors today, origination volumes in China exploded in the last four years, with lease origination growth estimated at 368 percent, he reports.
After speaking last month to international executives in Deyang City, China, Fales reports that most of the growth there was in vendor programs and large-ticket financing. He said the biggest surprise for Americans is that most of the growth is not due to foreign companies
entering China and establishing leasing operations, but from Chinese companies developing leasing capabilities internally. The Alta Group is helping Chinese companies understand the nuances of Western leasing.
The focus of Fales' most recent presentation in China illustrated three Western success stories: the U.S. independent, Tygris Commercial Finance; Grenkeleasing, a German company; and Docuformas, based in Mexico.
All three stories illustrate how small and mid-size companies expanded by choosing clear niches, establishing effective technology platforms and hiring and training the right people.
In his presentation, Fales covered capital and funding challenges as well as:- Credit information challenges
- Receivables management and collections
- Legal enforcement, including repossessions and seizure of lessees' other assets
- Asset management and remarketing
The conference, sponsored by the China Bank Regulatory Commission (CBRC) and International Finance Corporation (IFC), attracted 250 attendees.
Fales said that Chinese governments are encouraging banks to enter into small and middle market leasing where they anticipate the greatest opportunity for growth. In 2007, the CBRC wrote and issued a regulatory framework for bank-affiliated leasing companies, "Measures for the Administration of Financial Leasing Companies."
The Alta Group's Principal Jason Zhou, based in Beijing, who joined the international consulting firm in 2008, is helping Chinese lessors develop and manage back office leasing operations, install and manage leasing software platforms, and identify new Chinese markets. He is establishing a unit that provides complete outsourcing for such organizations to tap into when launching equipment leasing processes.
Fales also recently authored an industry journal article for the
Equipment Leasing and Finance Foundation which was published in the Spring 2009 issue. Updating the popular Alta report, "Breaking Down Great Walls." (October, 2005), it noted recent developments in China:
- Though annual GDP growth in China has declined to 8 percent, it is still robust by current Western standards.
- The SMB market remains largely un-penetrated by lessors.
- Mandarin language leasing software is now available from one major provider.
- New lease accounting standards were implemented in 2007 that are closely aligned with IAS (International Accounting Standards).
- A new property law enacted in 2007 provides protection of property ownership in China.
Fales also said in the article that large-ticket financing and vendor programs should continue to grow over the next two to three years, even with the current worldwide economic slowdown.
