China will definitely have its own URI, and the way it appears is more exciting.
herein from well micro channel number “工云租” (ID: indus-yunzu), author Zhu Jiarao, 36kr authorized to publish for industry reference.
“ People who have an understanding of the construction machinery industry may notice that equipment leasing is one of the hot topics in the industry in recent years. This article is a comprehensive construction company, leaser, agent, host Looking at the perspectives of different roles in the industrial chain, etc., try to look forward to the development path of China’s equipment leasing industry.”
Learn first:
Market | Construction companies are keeping the trend of buying and subletting, and the equipment leasing market is growing further
Trends| Leasing industry consolidation is bound to happen
Path | Industry Internet will become the road to industry integration with Chinese characteristics
Why rent equipment instead of buying
The customer of the equipment rental is a construction company, and its business is generally divided into 房建 and infrastructure. Housing construction includes industrial buildings, commercial buildings, residential buildings, public utilities buildings, national defense buildings, etc.; and infrastructure includes railways, highways, ports, airports, municipalities, etc.
The types of equipment used in residential housing projects are relatively small and simple, mainly tower cranes and industrial elevators, with a few common equipment such as excavators, truck cranes, and boom trucks.
There are relatively few types of equipment used in residential construction
Affected by macroeconomic regulation, the proportion of infrastructure and non-residential housing construction in the construction industry will increase, and this type of construction industry needs more equipment. At the same time, with the advancement of construction technology and rising labor costs, the types and quantities of equipment used in construction projects continue to increase.
A station construction site, in this photo there are 6 major categories of more than 10 brands of mechanical equipment at the same time
A fact that is not noticed is that during the construction project cycle, all devices will only be used phased in the project. Take the subway project as an example. The typical construction period is about 3 years. The most important equipment, the shield machine, will be used for about 1 year in the whole project cycle.Time, while other general-purpose devices tend to be shorter, and most devices only use months or even ten days. Under this construction organization mode, if the construction industry purchases all the equipment used, it will mean that the utilization rate of its equipment is extremely low. Therefore, lease is often a more economical choice for construction companies.
Temporary and commercial construction projects require more than a dozen to dozens of equipment to be constructed in phases
In addition to economics, there are other reasons for construction companies to choose to lease, such as reducing capital investment to ensure light asset operations, reducing the number of equipment operations and maintenance personnel, and ensuring the speed of equipment renewal.
Depending on the type of project, equipment rental costs account for 5% to 20% of the budget for the entire infrastructure project. Among them, scattered general equipment leases account for about 2% of the total project budget. That is, 20 billion yuan for every 1 trillion yuan of infrastructure investment is used for piecemeal equipment leasing.
Each large-scale construction enterprise group has hundreds of project companies carrying out different types of project construction at the same time, and the equipment rental service procurement in these projects is completely independent, So the customer lease of equipment rental is A typical “big group small purchase”.
In theory, equipment sharing can be carried out between different project companies under the group, and many construction companies have established equipment-oriented leasing companies. However, due to various reasons, the services provided by the internal equipment leasing company are far from meeting the needs of project construction. As a result, most construction project companies use their own local equipment to meet their rental needs. Leasing companies, not construction companies, must be the main source of customers for the OEMs.
Integration of the rental industry is bound to happen
At present, China’s leasing market is very fragmented, with more than 8 million engineering equipment scattered among hundreds of thousands of small and micro enterprises. This situation will be changed by industry consolidation, mainly with the following driving forces:
First of all, customers have needs. The construction industry has always been considered a “water deep” industry, until now,Many people will think that market-oriented business practices are not working in this field. In fact, with the continuous improvement of the domestic business environment, equipment leasing service providers are homogeneous and small in scale, which has become one of the reasons for non-marketing procurement behavior, not the opposite.
At present, the construction project company’s channel for supplier sourcing is limited and unreliable. The introduction of acquaintances and on-site visits are still the main source of sourcing. If there are reliable channels or better choices, almost all construction project companies hope to cooperate with equipment leasing companies with large scale, good service and standardized management. This is true whether it is a general contract or a subcontract.
Second, the profitability of small micro-leasing companies will continue to decline. The serious problem caused by the decentralization of the leasing industry is the low utilization rate of equipment. The following figure shows the attendance rate of different types of equipment calculated by a certain brand of construction machinery manufacturers, and the decline in equipment utilization rate will Significantly reduce the profitability of leasing companies.
Attendance statistics for different types of devices look low, but may fall in the future
In the past ten years, the number of equipment in China has been rising, and the utilization rate of equipment corresponding to this has also steadily declined. Due to the staged use of equipment in the construction of the project, the equipment that exits the construction needs to constantly search for new customers. As the proportion of medium- and short-term projects related to urbanization in the infrastructure projects continues to increase, the efficiency of traditional equipment leasing companies is still high. May be further reduced.
The number of construction machinery in China has tripled over the past decade, but the growth has slowed
The average attendance rate of a brand of excavator has dropped by 32% in 10 years
Third, industry consolidation will increase industry efficiency. Equipment leasing is a “scale efficient” industry. Equipment demand for a single category in a single city may fluctuate rapidly and violently, while overall demand for all cities in a given region tends to remain relatively stable. This is why regional companies may achieve relatively stable equipment attendance. For example, the leasing industry’s benchmark US United Lease (URI) overall equipment attendance rate has been stable at 67-69% for many years.
Joint Leasing has approximately 1,200 outlets covering North America, which is one of the basic conditions to ensure the overall attendance of its assets
Integrated China Road
Based on the market scale of China’s equipment leasing and the strong local production capacity of construction machinery, China market is bound to create equipment leasing service providers similar to U.S. joint leasing, while engineering equipment leasing industry How the integration of China will happen is a topic worth exploring. Let us imagine the following possible scenarios and paths:
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Nature Development
Excellent small leasing companies can grow and develop through their own accumulation, but if they only use the current business model and are subject to the speed of financing and sales channels expansion, it is conceivable that the development speed of this model will be slower.
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M&A
Joint Lease (URI) made more than 250 mergers and acquisitions from 1998 to 2001, and quickly grew to become the number one in the United States.The growth process has become a legend in the industry. However, this path is difficult to work in China in the short term. First of all, China’s current financing channels are not yet developed in the United States. Second, in the current market environment, small companies can quickly increase assets, but it is difficult to quickly bring customer relationship growth.
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Asset expansion
With the support of industrial capital, leasing companies can quickly expand their assets and seize market share. However, this growth method is more suitable for market segments where the number of social equipment is growing rapidly. If the social growth of equipment grows slowly or does not increase, this expansion mode will inevitably lead to a fierce price war between large and small enterprises. In the process of industry integration, the utilization rate of social assets may decline.
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New Ways to Enable Technology
The three possible paths mentioned above have their own problems. Let us return to the essence of the equipment leasing industry, which is a kind of enterprise service based on industrial assets. Even for those leasing suppliers that mainly focus on unmanned equipment and dry lease, their industrial assets are still carriers rather than essence. And eventually all the business and business models will return to the essence.
With the development of the Internet and IoT technologies, the application of big data can make leasing companies master the best solution for industrial equipment scheduling and configuration in a larger area; and the combination of management technology and IT technology makes Relying on the scheduling and configuration of data is possible. At the same time, such business information transparency will also make the inclusive financial policies advocated by the country easier to land. Overall, the current lack of technology is not the technology itself, but the scenario and business model that allows technology to reach.
To create an industry brand with IT and OT, and to create capital advantages with information advantages, this is a new road that is aspiring. Along this road, in the past year, our team has practiced a famous saying in the entrepreneurial circle – Instead of listening to the wind, it is better to jump leaping. The initial effect is very exciting. In a single point city, the efficiency of our work cloud leasing is three times that of the traditional method. 100% customer retention is an affirmation of the quality of Gongyun rental service.
The same person, I believe that China’s leasing companies will go out of their own stars in the era of industrial Internet, Long China!