China’s construction equipment dealers will be the “main force” in the development of earthmoving equipment rentals in the country, capitalising on their good relationships with both equipment manufacturers and Chinese contractors.
Speaking at the International Rental Conference (IRC) rental conference in Beijing on 21 September, Mr Ni Xinli, chairman and founder of Jiangsu Tongyuan Machinery Sales & Service Co Ltd, a Liugong dealer that started renting in 2012, argued that dealers were ideally placed to rent because they had equipment fleets, knowledge of the end customers, and established spare parts and service networks.
He added that rental would provide an additional revenue stream for dealers at a time when new equipment sales were soft.
“Rental companies organised by dealers and distributors will I believe be the future of rental in China", said Mr Ni, adding; "Rental will develop rapidly not because we want it to, but because of customer needs.”
Mr Ni acknowledged that there were challenges, with dealers lacking experience of rental management as well as knowledge of construction projects. He added that there was no established exit channel for used rental machines in China.
Dealers in China have access to fleets because there has been an oversupply of machines – and many machines returned by customers – following the slowdown in China’s construction market over the past two years.
He said dealers investing in rental would also face competition from professional rental players, who are starting to emerge in China, as well as the thousands of small owner-operator rental firms, which he predicted would merge or create alliances in order to compete with larger businesses.
Mr Ni also sent out a message to foreign investors and rental companies; “In the future, we hope that experienced foreign rental companies and investors with a long term vision will step into this market.
“Partnerships with large rental companies will be important for the ‘One Belt, One Road’ initiative and for major construction companies in China.”
Jiangsu Tongyuan Machinery Sales & Service Co Ltd was founded by Mr Xinli in 2000 and is based in Nanjing. It entered the rental business in 2012 and now has a fleet of 110 wheeled loaders and excavators and 135 aerial platforms, with a total fleet value of RMB 40 million (€5.5 million).
IRC is being sponsored by the following companies: Gold sponsor is Genie/Terex AWP; Silver sponsors are JLG and Sany; and Supporting sponsors are Dingli, Haulotte, Ritchie Bros Auctioneers, Skyjack and Sinoboom.