A senior figure in construction rental in China has outlined the difficulties facing the industry and described the formation of an alliance that he believes could bring tremendous benefits to rental companies moving forward.
Fei Xiaodong, vice general manager for sales and operations for Jiangsu Xugong Guanglian Machinery Rental Company, called for unity in a speech to delegates at the International Rental Conference Asia, in Shanghai China.
Mr Fei said, “Difficulty in collecting payment is the most painful point in rental business; are we going to live with that, or shall we collaborate, share and jointly drive change?”
Mr Fei, whose company is a subsidiary of state-owned construction equipment manufacturer XCMG, spoke of the company’s own pain as it transforms from being solely a manufacturer to also being a service provider.
He told delegates that state-owned contractors, which currently account for around 80% of rental companies’ revenues, are not only extremely demanding customers, but are likely to become even more powerful in coming years.
He described the attitude of contractors as moving solidly towards rental, with a view to mitigating risk, saving money and being light in asset base. He also described the market as being, “like a huge reservoir of demand, and likely to remain so for a long time.”
Nevertheless, he said, contractors will continue to “put the pressure of cash flow on service providers,” and spoke of the continuing poor payment record of contractors in the country.
Mr Fei announced that he and his team had been working for some time on selectively developing partnerships to create the biggest rental alliance in China.
“We’re on a journey,” he said, "staying tuned to capital markets, and following with interest the activities of internet companies, which are developing 3rd party payment platforms for customers".
Mr Fei suggested that with the adoption commonly accepted contracts, “the dream of a successful rental industry [in China] will come true.”