China's construction machinery manufacturers ** rental boom worry

In recent years, with several major manufacturers of domestic construction machinery industry establishing financing leasing companies one after another, “finance leasing” has been repeatedly referred to by the media as the “hot word” in the industrial machine market. What are the financial leases and what are the opportunities and challenges brought about by the establishment of financial leasing companies by major industrial machine manufacturers in a “leap” situation? Xiamen Zhuhai Chengde, General Manager of Haiyi Financial Leasing Co., Ltd., held a recent speech on the China Industrial Machinery Leasing Industry Development Forum to provide an in-depth analysis of the above issues.

Financial leasing, also known as equipment leasing or modern leasing, means that the lessor purchases leasing items from the lessor and leases it to the lessee according to the lessee’s specific requirements for the leasing object and the choice of the supplier, and the lessee Payment of rent to the lessor in phases, the ownership of the leased item within the lease term belongs to the lessor, and the lessee has the right to use the leased item. For industrial machine manufacturers, financial leasing has four functions: financing, promotion, investment and asset management.

Although financial leasing can bring the above benefits to industrial machine manufacturers, there are always two sides to the development of all things, and financial leasing can't go against this natural law. Zhuo Chengde pointed out that the workers in the industrial machinery industry will face the following five problems in the course of carrying out financial leasing business.

First, there is a difference between the marketing of the manufacturer and the financial leasing department. The marketing department of the work machine manufacturer is concerned with how to quickly increase the market share, especially after the credit leasing tool with financial leasing is even more powerful. The financial leasing department must not only help the marketing department to develop the market, increase the market share, expand its own business scale, but also control risks in accordance with scientific and normative methods. Therefore, the contradiction between the two parties is inborn.

Second, it is advisable to have a higher proportion of financial leases. From the annual reports disclosed by several listed companies in the industrial machine industry, it can be seen that the ratio of financial leases to their total sales is basically between 20 and 40%. Combine the considerations of the cash flow of the manufacturer, the credit sales habits of the dealers, and the acceptance of the local users, and formulate the most suitable ratio to meet the company's own development and market demands.

Third, the society's awareness of financial leasing. Since Caterpillar officially introduced the financial leasing sales method into the Chinese construction machinery market, after nearly 10 years of efforts, the society has generally accepted this advanced credit sales method. However, it cannot be denied that in the society, even some manufacturers and distributors in the industry have different degrees of knowledge or misunderstanding of financial leasing. This has caused great difficulties for the healthy and sustainable development of financial leasing business.

Fourth, the issue of withdrawal of used equipment. In the course of practical operations, how to deal with the machine returned due to overdue users? This is an unavoidable issue. It is the focus of financial leasing companies to provide fund support for users and distributors in resale or operating lease of second-hand equipment and help dealers to quickly activate their assets and to try to build a used equipment trading platform with the OEM.

Fifth, the issue of risk. Nowadays, most domestic companies use financial leasing as the distributor or host plant to undertake the business model of the repurchase obligation, that is, the distributors assume 100% responsibility. However, the financing and leasing companies of China's industrial machine manufacturers are only in the initial stage of development. With the continuous improvement of operating models, credit and asset management, different types of risk-taking methods for different distributors in different regions should be adopted.

In view of the difficulties faced by the current industrial machinery financing lease, Zhuo Chengde believes that as a financial leasing company, it is necessary to face and solve problems with “three to three unnecessary”. First of all, don't copy your photos, don't overly believe in authority. Financing leasing is not too long in China's application to the construction machinery industry, and most companies are exploring the stage. Each company's situation is different. Other people's successful experience may not be suitable for you, so don't follow suit. In the development process, communicate with your peers, choose your own development path, and take your own path. The management of the finance leasing companies of each manufacturer establishes some communication mechanisms to communicate with each other and learn from each other. Second, do not be afraid of difficulties. Now, the operating environment outside the finance and leasing industry is not very good, the laws and regulations are not perfect, the tax policy is being perfected, the social credit environment is poor, the vicious competition in the construction machinery industry has long been formed, the talents for the financial leasing industry are lacking, and the “funding bottleneck” is very Difficult to break through, the lack of a second-hand trading platform for leased assets has brought great difficulties to day-to-day operations and management, especially debt management. In the face of these practical difficulties, we must actively promote the industry's standardization and development together with our peers. On the other hand, we must find ways to resolve, penetrate into the market, study users, and coordinate with the marketing department on the premise of controllable risks. Maximize the needs of users. Third, do not stay in the status quo. Financing leasing companies cannot become a tool for lending in accordance with established procedures. They must have innovations in dealership management, business models, creditor's rights and property rights management, and should be good at using the features of financial services to act as boosters for the OEM's market development.