Growing an International Presence

If you need more reasons think diversification, consider this: By growing internationally, you could avoid having all your resources invested in one economy, much like a financial planner advises diversification in your portfolio. The same can be said about your global growth plan. There are plenty of opportunities around the globe for businesses looking to expand.

As the managing director of CIT's Vendor Finance business in Asia, I have overall responsibility for developing and executing a growth strategy for the region. To that end, I've learned it is critical to keep current on the status and development of trends in vendor financing in Asia as well as cross-border financing between Asian countries. I'm telling you this to help frame my experience and tips as they relate to lending and leasing.

Since the first leasing company was established in 1981, the Chinese leasing market has grown substantially, particularly since 2004, when the market opened for multinational and local bank-affiliated leasing companies. In 2009, leasing volume in China was estimated at approximately U.S. $27.8 billion with a 30% compound annual growth rate over the preceding five years. We believe there are significant growth opportunities in the leasing market across all segments in China for several reasons: leasing penetration still remains low; acceptance of leasing as a financing tool continues to grow; and customers are growing more sophisticated and have more options when choosing a leasing company.

Currently, the leasing market is driven by bank-affiliated leasing companies and vendor-related leasing companies, but we are seeing competition enter the markets from both multinational and local companies. The customer base primarily includes large local enterprises, the public sector, or multinational companies. And while there is a much greater need in the SME (small and medium enterprises) segment, it remains underserved due to underwriting challenges.

There is an opportunity for significant growth in the vendor financing space in China as leasing penetration continues to increase and fair market value leasing becomes more prevalent throughout the region. I think over the next several years we will look to grow our market share as the continued advances in technology and product design will drive end users to seek new products.

Understand the Local Banking Market and Practices

Local banking communities operate differently from the banks in the United States. We need to adopt the attitude of “partner” and treat them as such. They're not just another supplier. As a U.S. company, we can't impose our U.S. banking and treasury practices on the local funding partners.

To take this a step further, communication with your partner goes both ways. When working with a partner you need to be open and candid about your business strategy, any challenges you may face and opportunities that exist. There is a great mantra I'm sure you've heard before: Think Globally; Act Locally.

Local funding plans can benefit the bottom line as well. Leveraging local funding sources can help a company provide financing at competitive rates. It also helps minimize foreign currency exposure.

Consider Your U.S.-Based Relationships

In our case, some of the local players in Asia, such as Citibank, have an international network that may already be familiar with CIT in the United States. We can leverage these international relationships during our partner selection process.

Select a Competent Local Professional Team

The legal, tax and banking systems vary from country to country. Having the right attorneys, tax consultants and treasury personnel in place is key to the success of your business expansion. You need a team of professionals who fully understand both the local and U.S. practices and can bridge the gap. These people also bring their relationships with local banks to bear on a local funding plan, and they help monitor and run the local funding facilities.

Practice Patience

It's critical to be mindful of a country's cultural differences. These differences are what define its people. Not only does it allow a company to present itself in the best light to the indigenous people, but being knowledgeable of a country's culture can help to prevent serious problems down the line. A simple translation error from local Chinese to English or vice versa could be a potential deal breaker. Or a small mistake in behavior can leave a potential partner feeling disrespected.

Also remember that given cultural differences, what is important for the local funders may not be critical for us. Once the first deal is done, the rest is easy. In other words, be prepared to invest time and resources to get the first deal done and reap the long-term benefits.

Don't look at these factors as obstacles. Look at them as potential gateways to the next level of commerce. For many businesses, growing an international presence is critical to remaining profitable and competitive. There are plenty of opportunities for companies to expand their reach into foreign markets. These are some of the things you need to be aware of in your mission to be successful on a global scale.

Adrian Pang is managing director for CIT Vendor Finance, Asia. In this role, Pang has overall responsibility for the Asian Region and develops and executes a growth strategy for the region. Pang leads a team of financial service professionals in six countries within Asia focused on five market segments: Information Technology, Office Products, Health Care, Printing and Machine Tools.

It may sound daunting, but expanding internationally not only has the potential to increase your profits; it also gives your company the ability to grow profits at a higher rate. Added benefits that could be realized by an international presence include cost reduction through leveraging your resources where labor and commodities are more affordable.

Another motivation for growing your presence internationally is to enhance competitiveness. From small- and mid-cap companies to large corporations, the prospect of not expanding could mean potential loss of market share.

The idea of growing internationally seems counterintuitive to what's going on in the current economy. Many organizations have scaled back or halted growth activities completely. While other companies are on the sideline, now is the right time to consider global growth and put yourself ahead of your competition.

If you need more reasons think diversification, consider this: By growing internationally, you could avoid having all your resources invested in one economy, much like a financial planner advises diversification in your portfolio. The same can be said about your global growth plan. There are plenty of opportunities around the globe for businesses looking to expand.

As the managing director of CIT's Vendor Finance business in Asia, I have overall responsibility for developing and executing a growth strategy for the region. To that end, I've learned it is critical to keep current on the status and development of trends in vendor financing in Asia as well as cross-border financing between Asian countries. I'm telling you this to help frame my experience and tips as they relate to lending and leasing.

Since the first leasing company was established in 1981, the Chinese leasing market has grown substantially, particularly since 2004, when the market opened for multinational and local bank-affiliated leasing companies. In 2009, leasing volume in China was estimated at approximately U.S. $27.8 billion with a 30% compound annual growth rate over the preceding five years. We believe there are significant growth opportunities in the leasing market across all segments in China for several reasons: leasing penetration still remains low; acceptance of leasing as a financing tool continues to grow; and customers are growing more sophisticated and have more options when choosing a leasing company.

Currently, the leasing market is driven by bank-affiliated leasing companies and vendor-related leasing companies, but we are seeing competition enter the markets from both multinational and local companies. The customer base primarily includes large local enterprises, the public sector, or multinational companies. And while there is a much greater need in the SME (small and medium enterprises) segment, it remains underserved due to underwriting challenges.

There is an opportunity for significant growth in the vendor financing space in China as leasing penetration continues to increase and fair market value leasing becomes more prevalent throughout the region. I think over the next several years we will look to grow our market share as the continued advances in technology and product design will drive end users to seek new products.

Understand the Local Banking Market and Practices

Local banking communities operate differently from the banks in the United States. We need to adopt the attitude of “partner” and treat them as such. They're not just another supplier. As a U.S. company, we can't impose our U.S. banking and treasury practices on the local funding partners.

To take this a step further, communication with your partner goes both ways. When working with a partner you need to be open and candid about your business strategy, any challenges you may face and opportunities that exist. There is a great mantra I'm sure you've heard before: Think Globally; Act Locally.

Local funding plans can benefit the bottom line as well. Leveraging local funding sources can help a company provide financing at competitive rates. It also helps minimize foreign currency exposure.

Consider Your U.S.-Based Relationships

In our case, some of the local players in Asia, such as Citibank, have an international network that may already be familiar with CIT in the United States. We can leverage these international relationships during our partner selection process.

Select a Competent Local Professional Team

The legal, tax and banking systems vary from country to country. Having the right attorneys, tax consultants and treasury personnel in place is key to the success of your business expansion. You need a team of professionals who fully understand both the local and U.S. practices and can bridge the gap. These people also bring their relationships with local banks to bear on a local funding plan, and they help monitor and run the local funding facilities.

Practice Patience

It's critical to be mindful of a country's cultural differences. These differences are what define its people. Not only does it allow a company to present itself in the best light to the indigenous people, but being knowledgeable of a country's culture can help to prevent serious problems down the line. A simple translation error from local Chinese to English or vice versa could be a potential deal breaker. Or a small mistake in behavior can leave a potential partner feeling disrespected.

Also remember that given cultural differences, what is important for the local funders may not be critical for us. Once the first deal is done, the rest is easy. In other words, be prepared to invest time and resources to get the first deal done and reap the long-term benefits.

Don't look at these factors as obstacles. Look at them as potential gateways to the next level of commerce. For many businesses, growing an international presence is critical to remaining profitable and competitive. There are plenty of opportunities for companies to expand their reach into foreign markets. These are some of the things you need to be aware of in your mission to be successful on a global scale.

Adrian Pang is managing director for CIT Vendor Finance, Asia. In this role, Pang has overall responsibility for the Asian Region and develops and executes a growth strategy for the region. Pang leads a team of financial service professionals in six countries within Asia focused on five market segments: Information Technology, Office Products, Health Care, Printing and Machine Tools.