Rental potential?

It would be an exaggeration to say construction equipment rental is taking off in China, because clearly it isn’t, writes Murray Pollok of International Rental News. The low cost of labour, the difficulty in importing used equipment, and the absence of a formal - as opposed to informal - rental culture are all playing a part in slowing the growth of rental.

Even so, there are clear signs that the groundwork for a true rental business are beginning to be laid, with much of the activity being done by Caterpillar’s dealers, by rental companies in Hong Kong, and by aerial platform renters, dealers and manufacturers who see rental as the key to opening up a potentially massive market.

It is probably Hong Kong rental companies who are acting fastest. “This is the right time to do something, instead of waiting”, says Geoffrey Lee, general manager of Modern (International) Access & Scaffolding, a Hong Kong access sales and rental specialist, “I want to find out about the market for myself.”

Japan is a highly developed rental market, of course, and some of its bigger players are now making tentative entrances to the Chinese rental market. Kanamoto, Japan’s fourth largest rental house, announced in September it would have a rental outlet up and running by the end of the year. The company specifically says its joint venture (with Shanghai Jinyuan Rental Co) aims to help develop equipment rental in the country. It is also worth noting that another of Japan’s rental giants, Nishio Renta Alll, is exhibiting at Bauma China.

But perhaps the most significant recent development was the launch in May of the Cat Rental Store franchise in China. Caterpillar’s four Chinese dealers already have 12 stores open and that number is expected to more than double by the end of the year.

Lau Chiak Cheong, Caterpillar marketing consultant for rental and used equipment in Asia Pacific, says concept of rental is new in China; “What does happen at the moment is very informal, with rentals between friends or business acquaintances at low rates. I think what we are doing will be good for China in setting rates and benchmarks.”