After the rapid development during the "Eleventh Five-Year" (2006-2010) period, China’s financial leasing industry gradually returned to reason in 2011, and achieved annual business volume of RMB 930 billion, up 32.9% year on year, far lower than the CAGR of 205.8% during the “Eleventh Five-Year” period. There are two main reasons for the gap: First, the growth of construction machinery, ship and other downstream industries slowed down; Second, the government adopted a tight monetary policy, impacting the capital source of both domestic-funded and foreign-funded leasing companies.
At the end of 2011, the Ministry of Commerce of China promulgated the “Guidance on Promoting the Development of Financial Leasing Industry during the Twelfth Five-Year Period”, paying more policy attention on the financial leasing industry; in addition, among other factors, more than 100 financial leasing enterprises set up in 2011 will start operation in succession, therefore, it’s expected that China’s financial leasing business volume will reach RMB 1.3 trillion in 2012.
The Report analyzes the current status of China’s financial leasing industry, and focuses on the operation of three major types of financial leasing companies in China, and the development of aviation, ship, construction machinery, medical equipment and other major financial leasing market segments.
By regulatory authority, financial leasing companies in China can be categorized into financial leasing companies, foreign-funded leasing companies and domestic-funded leasing companies.
Financial leasing companies are mostly invested by banks, and take the lead in terms of the level of financial leasing. In 2011, there are 20 financial leasing companies in China, accounting for RMB 390 billion (41.9%) of the total financial leasing business volume in the year.
Meanwhile, foreign-funded leasing companies have reinforced their strength continuously, especially after the transfer of the right to examine and approve foreign-funded leasing companies to lower authorities in 2010. As of the end of 2011, there are 200 foreign-funded leasing companies in China, an increase of 80 compared with 2010; the financial leasing business volume also increased by 69.2% year on year to RMB 220 billion. In 2012, with the implementation of “Foreign Investment Industry Guidance Catalog (2011 revision)”, the category of “Foreign-Invested Financial Leasing Company” will be adjusted from “Restricted” to “Allowed”, and the quantity and financing scale of foreign-funded leasing companies will further expand in the future.
From the perspective of application field, the development of financial leasing businesses has been quite mature in industries such as aviation, ship, construction machinery and medical equipment. Typical enterprises include BOC Aviation Pte Ltd., Minsheng Financial Leasing Co., Ltd., Zoomlion Finance & Leasing Co., Ltd. and Far East Horizon Limited.
In 2010, BOC Aviation Pte Ltd delivered a total of 32 aircrafts to customers, which, coupled with effective financing strategy and good financial constraint mechanism, created USD168 million of net income after tax for the company. In the first 10 months of 2011, the company already raised more than USD 1.5 billion, which can be used for the financing of more than 30 aircrafts. The full-year net income after tax is expected to reach USD 175 million.
Minsheng Financial Leasing Co., Ltd., founded in April 2008, has entered into cooperation with a number of ship manufacturers including China Shipbuilding Industry Corporation, China Oilfield Services Limited, China Changjiang National Shipping (Group) Corporation, Jiangsu Rongsheng Heavy Industries Ltd., CCCC Tianjin Dredging Co., Ltd., and become the largest enterprise in China’s ship leasing market.
Zoomlion Finance & Leasing Co., Ltd., a subsidiary of Zoomlion, is one of the earliest enterprises involved in the construction machinery financial leasing market in China. It now has two business platforms: Zoomlion Finance & Leasing (Beijing) Co., Ltd. and Zoomlion Finance & Leasing (China) Co., Ltd. In addition, it provides financial leasing services in Australia, Hong Kong, Italy, the United States, Russia and other regions. Its financial leasing transaction volume has increased continuously, from RMB 2.4 billion in 2008 and RMB 9.4 billion in 2009 to RMB 17 billion in 2010.