Minsheng Financial looks outside China for growth
Minsheng Financial Leasing Corporation (MSFL) says it will need to look outside China for new clients, as uncertainty in the domestic market continues.
Despite having financed almost 100 aircraft, MSFL also has a large number of aircraft orders outstanding with manufacturers.
The Chinese market – still very much in its infancy – has been stalling in the last few years, mostly due to slow-moving reforms on low-level airspace, and difficulties with appropriate infrastructure.
The country’s airspace, heavily controlled by the air force, is showing signs of opening up. However, towards the end of 2013 the new leadership of China introduced cost saving guidance that had an almost instantaneous negative impact on business aviation in the country.
The resultant anti-luxury backlash hit the domestic charter market hard. Chinese officials, long used to chartering business aircraft for trips around the country found themselves flying by scheduled airlines. And those airlines soon found that the need for domestic first class cabins reduced, as officials and business leaders distanced themselves from seemingly unnecessary luxuries.
The number of aircraft actively marketed for sale also jumped as well. Data provided by AMSTAT showed a total of 38 aircraft for sale in the greater China region a the mid-point of 2014, which is just over 10 per cent. That’s the first time that the number of aircraft actively for sale in the region has been above 10 per cent since 2009.
So with China in trouble, business aviation companies in country looked to adapt to the changing environment. Several operators merged, creating larger strong companies with better economies of scale, some looked outside business aviation for new avenues, and some realised that to survive, they would need to look outside their home-country.
The Minsheng group of companies did exactly that. With Minsheng International Jet (MSIJet) completing the purchase late last year of Hong Kong based charter and management company Business Aviation Asia, the company immediately had a footprint outside its core domestic Chinese market. Sister company Minsheng Financial Leasing has also started looking outside China for new business opportunities.
But with Johnny Lau’s departure for personal reasons at the end of 2014, the company looked internally for a replacement, and eventually chose Fuhou Wang.
Wang had been one of the founders of the aircraft leasing division in 2009, before heading up the commercial and business aviation business in Northern China. Wang was a product of the prestigious Civil Aviation University of China, from where he graduated in 1997.
When I meet Wang in a London hotel, Chinese Premier Li Keqiang’s had recently delivered his speech at the World Economic Forum. Chinese economic growth for the year had been projected to stall, although still be above six per cent.
We talk first about the Chinese economy, macro-economic conditions in the country, and and whether country’s growth will beat Li’s projections.
But soon we get onto Minsheng, and the current state of the Chinese business aviation market. Wang tells me that 2014 had been okay for Minsheng, mirroring the views earlier in the year of MSFL’s managing director of aircraft financing Zhu Limi.
Limi had spoken on a panel during Corporate Jet Investor’s 2014 Asia conference, held that year in Hong Kong. Earlier in the day we’d been told by charter companies that a huge proportion of Chinese operators hadn’t made money in 2013, and that things were looking bleak for 2014.
Taking this on board, the panels moderator asked the participants how the year had been for them. Limi’s answer was that Minsheng hadn’t seen a slow-down, and if there was, the company wasn’t affected by it.
Back in London, Wang tells me that the company’s clients come from all major domestic industries. This he tells me gives the company a unique insight into the macro-economic conditions in the country. While MSFL do see spots like the real estate market, he tells me that there are plenty of bright spots, and thinks that economic growth will match, or even exceed Li’s estimate.
But it’s when we start talking about Minsheng’s growth that Wang really opens up. There are two questions that I came to the meeting armed with, and both are swiftly answered.
First I wanted to know about Minsheng’s international plans. With China slowing Minsheng would have to look outside the country for growth, and Wang confirms this, saying that the company must partner with international companies in order to adapt to the changing domestic scene. He also says that MSFL has in the past placed aircraft on other registries, giving the US and Bermuda as examples,
The second question I ask in a more round-a-bout way, before finally getting to the point. Having heard several rumours that the business airport project at Sanhe, Hebei province, has been cancelled, I was keen to see if this was true. Wang quickly quashes the rumours, telling me that the planning process is still on-going, and that Minsheng remain committed to the project.
After all the recent changes at Minsheng, both in aviation and with the parent bank, it’s clear to see that Minsheng has adapted their vision of business aviation in China.
And whilst looking outside the country for international clients may have been forced on the company by domestic market uncertainty, it still remains true that in several years’ time, Minsheng will be able to sell or lease you an aircraft, manage the aircraft on your behalf, as well as being able to have it land at a Minsheng Airport.