1. China's leasing market experienced 50% growth in 2010 with sales of $63.7 billion, ranking it second globally behind the US. 2. The rapid growth is attributed to China joining the WTO in 2001 which lowered trade barriers and opened the leasing sector to foreign investment, and regulatory changes in 2007 allowing banks to invest in leasing subsidiaries. 3. While China saw strong growth between 2007-2010, the rate has slowed since 2010 due to decreasing bank loans and challenges of standardization across local markets and competition from over 400 leasing companies.

1. Pavitra Venkateswaran
870
Semester V, B.B.A; LL.B (Hons)

2. Annual Volume
Europe
N America
Asia
S. America
Aus/NZ
Africa

3. -20
-10
0
10
20
30
40
Europe N America Asia S. America Aus/NZ Africa
Growth
Sales

4. -10
-5
0
5
10
15
20
25
30
35
40
% of World Market
Volume (2009)
% of World Market
Volume (2010)
Change from 2009-2010

5.  New business growth in China amounted to 50%, with leasing
sales of US$63.7bn.
 The pace of China’s growth can be seen from its ranking over the
past three years –
 eighth position in 2008,
 fourth in 2009 and
 now second, after the US.
 The main driver occurred in 2007, when the country’s
commercial banks could become licensed to invest in subsidiary
finance leasing enterprises as non-bank financial institutions.
 By the end of 2010, there were 198 leasing firms in China, up
from 150 in 2009.
 Twenty-one were bank lessors, 44 captives and 182 were third-
party independents.

6. 2008
GDP
2009
GDP
2010
GDP

7. Ranks 2nd, after USA I n terms of
Annual Volume
Annual Volume – US$36.72
%Growth between 2009-2009 – 50
% of Market Penetration – 3.8

10.  2001 – 6th largest trading nation
 Successfully completed negotiations on terms of
membership with WTO
 Resulted in lowering of barriers
 Entry into WTO sparked rejuvenation of leasing sector
 Joint Venture leasing companies - existed since 1980s
 2005 – Market opened up by Ministry of Commerce to
leasing operations wholly owned by Foreign Investors
 Finance companies were also allowed to engage in
vehicle leasing

13.  So in fact since 2010, a period when traditional bank loans were
decreasing, which would seem to offer a fresh opportunity for non-
bank lessors, the growth rate for the leasing sector has slowed
compared with previous years.

14.  Near-term challenges include:
 • Lack of leasing law to support leasing activities;
 • Limited credit information on individuals or SMEs;
 • Different local practices in different areas of China
create a standardization challenge.
 Medium-term challenges include:
 • Too much competition from 400-plus leasing
companies;
 • The steady slowing down of China’s economic growth.”