Equipment leasing and all things related

Well, I am off to China this week to conduct training for one of our international lessor clients. I will have attendees from South Korea, the PRC, Taiwan, and Singapore, so it will be an interesting mix of students. The reason I mention it is not to elicit concern over me potentially coming down with bird flu, or that conducting training internationally is that unique for me. I really don’t plan on catching bird flu and I regularly provide equipment leasing training in Asia. No, the impetus for the post is the potential market that China represents.

 

We all know that the Chinese market is huge – this is nothing new. The leasing market, however, is beginning to grow domestically, and is attracting interest from international lessors looking for expansion and growth opportunities. The Alta Group is opening an office in Beijing, and we are holding a meeting there this month to explore our growth options and strategies. We see opportunities not only from the domestic side of the business, but also from international lessors establishing operations there. Several of our clients already have a presence in China, and interest in this market is growing, hence, our presence there.

 

Although the report states that lessors seeking expansion opportunities must consider the Chinese market, much of the infrastructure needed for a viable equipment leasing industry in China is not yet in place. As a result, it is critical that lessors be armed with adequate and accurate information regarding the opportunities and pitfalls in this market.

There also are uniquely Chinese challenges that go beyond differing tax and accounting rules. For example, the legal rules have basic similarities, but the lack of adequate leasing law makes collecting past-due rents and repossessing equipment in China very difficult. Other major differences between the US and China include language, culture, and the number and nature of business regulations.

 

Because of the language and cultural issues, most international lessors with operations in China today have Chinese partners. With the recent availability of the Wholly Foreign-owned Enterprise (WFOE) option and the new leasing law being considered, however, many large lessors are seeking to establish operations on their own. Smaller lessors, on the other hand, may continue to seek out partners, primarily due to the regulatory capital requirements.