As an emerging equipment financing mode, the financial leasing develops fast in recent years thanks to its low down payment, long repayment period, wider room for maneuver and convenient operation. Many Chinese construction machinery manufacturers adopt the financial leasing to increase their product sales volume, acquiring steady and continuous cash flow. Meanwhile, clients can also achieve the use right of equipments to raise their returns based on less funds and low time cost.
Construction machinery manufacturers can establish their own financial leasing companies to facilitate the fulfillment of rights and responsibilities of participators while reducing intermediate links in the product lease and purchase process for clients. Because many construction machinery clients face the delayed payment of the construction funds, they mostly concern the financial support policies and the flexibility of product rent payment of enterprises.
Domestic and foreign investors actively carry out their layout on Chinese financial leasing market to take the initiative. In 2002, Zoomlion Heavy Industry Science & Technology Development Co., Ltd set up the first construction machinery financial leasing company in China. In March 2009, Zoomlion established Zoomlion Finance & Leasing (China) Co., Ltd in Hong Kong with the funds of USD 80 million. In March 2009, Liugong Machinery Co., Ltd set up Liugong International Leasing Co., Ltd. with its wholly-owned investment arm in Hong Kong. On March 21st, 2009, attracted by the optimistic prospect of the financial leasing market, Shantui Construction Machinery Co., Ltd invested RMB 180 million to set up Shantui Leasing Co., Ltd in Beijing. In 2009H1, XCMG Construction Machinery Leasing Co., Ltd of Jiangsu realized the revenue of RMB 1.5 billion. In the previous three quarters of 2009, the revenue of Liugong International Leasing Co., Ltd exceeded RMB 1 billion.
In November 2009, after releasing the Technical Specifications of Second Hand Equipment Circulation, China’s Ministry of Commerce begins to completely investigate the second hand machinery trading market again, planning to formulate the related exit mechanism to set up the standard platform for the downstream second hand trading market of the financial leasing industry.
Chinese construction machinery financial leasing market will maintain the high-speed growth in the coming years. The market scale is expected to exceed USD 10 billion in 2014.
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