Financial leasing was first introduced in 1996, with the maiden deal conducted by six of the nation’s largest lenders.
However, Beijing stopped all financial leasing transactions for lack of proper regulations.

In March this year new regulations were introduced, giving financial leasing a fresh opportunity.

Ronald Kung Yiu-fai, chief executive of Golden 21 Investment Holdings, said, ‘The reason for the new arrangement is that China has excessive capital and the government is trying to launch different investment tools to cool down the stock market.

‘Second, policymakers want to regain ownership of transportation in domestic enterprises. As most transportation companies finance through foreign financial leasing, most aircraft and automobiles are owned by foreign investors, mostly from the United States and Japan.’

Then he said, ‘Over 55% of capital expense of enterprises in the United States is funded through financial leasing, while in China the figure is only about 1.2%.’

Which means many Chinese companies cannot follow the old maxim: If it depreciates with time, lease it. If it appreciates, buy it.

Ronald Kung Yiu-fa said he is positive about the market potential: ‘Everyone in the financial field wants to explore the China market. Financial leasing is an ideal choice as it is still new and there are fewer competitors in the mainland.’
Source: The Standard