Overview of Finance Leasing in China
2018-08-16 03:26 Thursday
China's Thirteenth Five-Year Plan has attracted substantial investment in urban and industrial infrastructure, as well as emerging industries, marking a golden age for the finance leasing industry in China.
By the end of June 2017, the number of finance leasing enterprises in China had reached 8,218, a total 44% higher than the previous year (excluding single-project, subsidiary, SPV, and acquired overseas companies).
Through June 2017, 66 finance leasing enterprises have been approved in China, a 26.9% increase from 2016, with a 16.2% increase in contract values.
In April 2016, the Ministry of Commerce and State Administration of Taxation empowered Free Trade Zone trade and tax departments to approve pilot finance leasing enterprises. Due to a positive reception from regional authorities, the total number of pilot domestic-funded leasing enterprises in 2016 was 224, an annual increase of 17.9% from 2015, with 25.4% growth in contract values.
The number of foreign-funded leasing enterprises in China was 7,928 in June 2017, 45% higher than 2016, with a 18.6% increase in contract values.
Despite the obvious challenges awaiting China's finance leasing industry, numerous opportunities still exist for opportunistic enterprises.
A major focus of in the national development plan in 2018 is to integrate the financial services industry with the real economy, a favorable policy environment for finance leasing enterprises. However, a main priority is navigating the relatively strict regulatory environment, and hedging against risk.
Due to a slowdown in the quantity and size of enterprises, as well as regional development imbalance and decreasing penetration of the leasing market in China, the industry is in urgent need of new business models, competitive differentiation, value chain expansion and sustainable development.
Due to tightening fiscal policies, liquidity is expended to further drop in 2018.
With regard to financial performance, asset quality and risk control remain the major focus for lessors in 2018.
Generally speaking, China's finance leasing industry is still in its infancy, with an expanding market and moderate competition.Projections state that CAGR will exceed 20% through 2021 and an overall value of ¥20.79 trillion RMB, indicating a promising future.