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Financial leasing joint venture to serve smaller companies

By Shi Jing in Shanghai | China Daily | Updated: 2013-01-04 07:57

Shanghai Yufeng Financial Leasing Co Ltd officially began operating in the city on Thursday, marking the establishment of the largest financial leasing joint venture to be based in China.

Yufeng has $30 million in registered capital and has obtained an approval from the Shanghai Municipal Commission of Commerce to provide financing for projects involving large machinery and equipment, high-end luxuries such as sports cars and luxury cruises, chemical products and the manufacturing industry.

Yufeng expects most of its customers will be small and medium-sized companies, as well as growth companies.

Financial leasing companies in China have mostly been either completely domestically controlled or exclusively foreign funded, said He Jie, chief executive officer of Yufeng. "Complicated application procedures and relatively small financing options have hindered the development of SMEs."

She said Yufeng, which plans to eventually go public, has sought to form partnerships that will eventually provide financing to Dalian Renewable Resources Exchange, Guangdong Evergain Chemical Co Ltd, the Qingdao-based Furi Group, the Nanjing-based Time Leader Co Ltd and the Germany-based European Advanced Superconductors GmbH & Co.

"China's economy has now moved into the phase of being a buyers' market, which will provide a sound foundation for financial leasing companies," said Zheng Xiuming, president of Evergain Chemical.

"The financial industry has demonstrated a prosperous environment that also facilitates the development of financial leasing."

Financial leasing is one of the three most important means of raising money for investments, the other two being bank credit and securities. About one-third of the world's fixed-asset investment is conducted through financial leasing.

According to the Leasing Committee of China Association of Enterprises with Foreign Investment, more than 550 financial leasing companies were operating in China by October 2012, having total registered capital exceeding 150 billion yuan ($24 billion).

Statistics provided by the China Banking Association show that Chinese financial leasing companies had 1 trillion yuan in capital by the third quarter of last year, 30 times what they had in 2007.

The Ministry of Commerce has released an official guiding opinion on promoting the development of the financial leasing industry during the country's 12th Five-Year Plan period (2011-15). It says the new trading method has "played an outstanding role in China's attraction of foreign investment, import of foreign equipment and support of the technical improvement of domestic enterprises".

Contact the writer at shijing@chinadaily.com.cn

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