ALD International was the first independent international leasing player in China and has been operating there since October 2006.

Initially the firm established an operation with sister company SG Equipment Finance – also part of Societe Generale – but it later set up a joint venture with Fortune Investment, a subsidiary of Chinese steelmaker Baosteel.

Mr Albertsen explains: ‘We recognised in 2008 that we couldn’t move like we wanted to on our own and we needed a partner – which ended up being Fortune Investments. We needed a partner there to help us there dealing with the local authorities, and helping us dealing with the market there, etc.

‘We established the joint venture in late 2009 then basically we have taken a new approach to the market throughout the first part of 2010 – redesigned the products, and the strategy with our partner. Following that we started growing end of last year – from September 2010 we have been building up the company.’

Today, the firm is headquartered in Shanghai and has branches in Beijing and Shenzhen, with four new branches opening this year to cover seven regions nationally.

Commenting on the firm’s longer-term plans, Mr Albertsen says: ‘We are predicting now that we will be growing fairly rapidly. We are targeting around 1,000-1,500 cars end of this year. However I would say that market growth in general and our market growth will depend much more on how the market will mature. And also the fact that China is a particular market – it’s very different from what we see elsewhere.’

In fact he says that there are some fundamental differences between the Chinese car leasing market and the Western model. ‘When you sell services, it’s normally associated with a kind of comparison to what is the cost of it, in internalisation and on externalisation – and in the case of China labour costs are not very expensive. You have plenty of people to do things and they don’t have the same idea of outsourcing as we have. You can get people who are paid €300-400 a month for that – that’s very cheap.’

As a result, there’s also a lot more demand for driver services. ‘It’s a real pre-requisite in the market that you can offer really good driver services,’ says Mr Albertsen. ‘We also offer drivers elsewhere in smaller markets but it’s not like you’re out if you don’t do it. In China if you don’t have a good driver service you are actually out so that’s vital.’

Another area where the Chinese market differs significantly is in the number of vehicles run by firms.

‘In China the company car is not really spread out like in the rest of the world. If you go to a client the size of a big European group – in a country like France or the UK they would have a couple of thousand company cars. They might run just six cars here.

‘That seems to be changing though and firms are now considering cars for the sales force as well as part of the compensation package.’

Mr Albertsen also says that the Chinese car leasing market differs fundamentally from the Western one in that it is set up much more as a kind of a hybrid between daily rental and long-term leasing.

He explains: ‘We do have clients in, say, Wuhan, taking a completely standard full-service leasing and management product. But what you also see are lots of companies coming in and making projects and having a need for cars for 6, 12, 18 months – which was typically not our product leader but we’ve now adjusted the product much more to the Chinese standard. I would say today that average contract is 24 months. That’s quite different from what we’re used to in Europe.’

He adds: ‘The market doesn’t actually price in the fact that if you take a car for three years you would normally have a cheaper contract than for 24 months. That’s not absolutely the truth today so from a financial incentive there’s no reason for taking a car for 24 months, because after 24 months many of the clients prolong the contracts. The whole market is betting on the fact that people take the cars longer than this.’

As well as competing with local leasing firms, ALD International is also rivalling conventional rental companies such as Avis and Hertz, but Mr Albertsen believes this will change soon.

He says: ‘It’s a very immature market and it’s following the trend of many of the other immature markets that we saw in Eastern Europe, say 5-7 years ago. To a large extent some of the rental companies developed this business there initially and then when it came to the scale of it they could not really succeed because they did not have access to funding and that’s when ALD International, Arval, LeasePlan etc moved in. And you now have a very clear definition in a mature structure of what is a rental firm and what is our business. But in many of the immature markets you see that there is a kind of inbetween for some years, as there is in China.’

However, despite the current hybrid nature of the leasing market, ALD International believes it has a number of USPs compared to local leasing firms.

‘I would say that one of our main advantage to local companies is our ability to fund the business. Funding is a restriction for many of the local businesses in China. In the end our business is a scale business and for this you need a good heavy financial muscle on the balance sheet to cater for this. You can run a thousand or two thousand cars in a structure like this, maybe even three or four thousand cars but from there on when you need it moves, you need something else.

‘Another clear advantage is of course our global solution and expertise that we bring to the multinational corporate community in China. These companies want to do what they are used to in other markets and do not want to take un-necessary risks in the fleet management.

‘In time, I’m absolutely sure that the leasing market in China will look much like any other country but whether it will take five years or 20 years, it’s very difficult to say.’

And local variations will always be part and parcel of the Chinese market, he adds.

‘You see that the Western practices are to some extent being brought into this market but it is happening slowly and definitely with a Chinese touch – it’s not like they just take the practice of their business elsewhere in the world and say, “This is what we do in Hungary, the States and the UK, so this is what we do in China.” They will want to do it the Chinese way.

‘It’s still a very local market and you really need to understand the local practice at the country level to be successful. ‘