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BICES/IRC REPORT
IRN NOVEMBER-DECEMBER 2013
BICES round-up
What was new at this year’s
BICES exhibition in Beijing,
China? Plus, below, news
from the first International
Rental Conference, held the
day before the show. Reports
by Murray Pollok, Euan Youdale
and Helen Wright.
Michael Kneeland, CEO of United Rentals, used his
keynote address at the first International Rental
Conference (IRC) to encourage local companies to
continue to develop the rental market.
Nearly 300 industry professionals attended
the event in the Swissotel in central Beijing on
14 October, which was organised by
International
Rental News
(
IRN
) together with KHL. The Gold
sponsor for the event was Snorkel.
“I know that, from a global perspective, the cost
of construction labour in China has been very
affordable. But it won’t be that way forever. Even a
small shift in the cost of labour can help make a
strong case for equipment rental,” said Mr Kneeland.
Comparing the Chinese rental market today to his
early days working in the US, he said; “To make a
living in the industry back then, you had to be both
a pioneer and an evangelist. You had to get in front
of the prospect, make your case, and then let the
equipment do the talking for you!”
Gérard Déprez, president of Loxam, highlighted
how recession can encourage the development
of a rental market, and urged investors in China’s
rental market to have a clear strategy and to focus
on a particular rental model; “Whether you are an
individual, a financial fund, a manufacturer or a
contractor, the key to success is to pick your model
and organisation in accordance to your market,
its potential, your competition and your financial
means, and stick to it.”
Jay Early, vice president Europe, Middle East and
China at Hertz Equipment Rental Corp (HERC), told
delegates that China was already a US$3.8 billion
market, but dominated by very small, family owned
businesses, with fewer than 100 rental companies
in China with assets valued at more than $8 million.
Of that $3.8 billion, Mr Early estimated only 15% is
represented by professional rental companies.
He said that with wages increasing, safety
concerns driving mechanisation of construction,
and a tightening credit market; “The result will be
dramatic growth in rental.”
However, he cautioned that there were difficulties
in renting in China, including the lack of a good
credit evaluation system on potential customers,
problems with the way equipment is treated, and
the absence of a mature used equipment market.
The conference was officially opened by Mr
Jia Li Cai, managing director of the Machinery
Management & Rental Division of the China
Construction Industry Association (CCIA).
Mr Jia said China's rental industry had only 20
years of history, but was developing quickly, with
20000 rental companies mainly offering cranes and
hoists; “However, a rental market for construction
machinery has already taken shape. In the past, or
rather, twenty years ago, contractors would buy,
own, and use the equipment themselves. Now, 80%
of the machinery used by contractors is from the
rental market.”
In a forthright speech, Chai Zhao Yi, managing
director of Shanghai Pangyuan Construction
Equipment Rental, first thanked delegates for
braving Beijing’s polluted air, and then proceeded
to give a very sobering account of the difficulties
involved in operating a rental business in China,
including corruption and slow or non-payment by
state-owned contractors. Mr Chai welcomed foreign
rental companies to China, but warned; “you have to
be strong to survive the Beijing air.”
The second IRC conference will take place in
Shanghai on 24 November, 2014, the day before the
Bauma China exhibition. See news for details.
T
his year’s BICES exhibition provided further
evidence of the slowdown in China’s
construction equipment market, with a smaller
outside area and some notable absentees, including
Atlas Copco and Komatsu
The slowdown is creating some significant
problems for Chinese manufacturers and dealers.
Speaking at the show, Off-Highway Research’s Beijing-
based senior consultant Karin Sun warned that sales
were unlikely to rebound strongly. The organisation
forecast that unit sales of construction equipment
could be 9% down this year, with only a modest 1%
rise next year.
Ms Sun said a particular problem for dealers was the
large number of used machines being repossessed
The BICES showground.
The event was held near
Beijing on 15-18 October.
BICES 2013
IRC puts spotlight on Asia rentals
Michael Kneeland at the International Rental Conference.
Around 270 delegates attended the first International Rental
Conference (IRC) in Beijing on 14 October.
