The hot June sun pounds mercilessly on a sea of factories in an industrial park in the Mekong Delta in Vietnam’s Long An Province. Dressed in a white long-sleeved shirt, suit pants, and black shoes, Aaron Huang, the assistant general director of Chailease International Leasing Co. (Vietnam), sweats heavily as he walks inside one of those factories, identified by the sign “First Choice.”

First Choice International, which has a 15,000-square-meter factory and 500 employees, is Vietnam’s only manufacturer of medical textiles and exports its products to the West.

“We plan to buy an automatic knitting machine for socks. We hope to get a loan,” says Myke Huynh, First Choice’s operations manager, as he walks in an aisle crowded with knitting machines explaining to Huang the company’s situation and pitching him for another loan.

The 40-year-old Huang answered Huynh in fluent English: “I’ll bring back your request and evaluate it. I would like to support you.”

Mostly Local Customers

Three years ago, First Choice took out a US$500,000 loan from Chailease Vietnam to buy these machines, enabling the company to move up the value chain from regular knitted goods to products with double the gross margins – medical and surgical textiles (such as knitted surgical towels and patient socks). More recently, its orders have surged dramatically, forcing it to expand its plant capacity five-fold, which will require the purchase of new equipment and new financing.

First Choice is just one of Chailease Vietnam’s 1,500 clients.

Chailease Holding Co., the parent company of the Chailease Vietnam, is the leading leasing brand in Taiwan, and the biggest overseas contributions to its revenues have always come from China. But in 2016, the company’s revenue growth in Southeast Asia exceeded that in China for the first time, helping Southeast Asia contribute 14 percent of the group’s revenues.

 “Southeast Asia is growing very quickly, and the main reason is Vietnam’s high rate of growth,” says Chailease Holdings Chief Strategy Officer Liao Ying-chih, who is responsible for the overall development of the Southeast Asian market.

The company already has a presence in Thailand, Vietnam and Malaysia and is currently planning moves into the Philippines and Cambodia.

The organization set up Chailease International Leasing in Vietnam in 2007, and it has risen to become Vietnam’s biggest leasing outfit since then. The company’s assets have soared five-fold in the past five years, and its workforce has grown from 46 to 205. Of the 11 major leasing companies in Vietnam, both domestic and international, only two saw their assets grow last year, and Chailease International posted the highest growth of 45 percent.

“An outsider has risen up. We are now No. 1 in total assets,” says Chailease Vietnam general director Robin Wu, unable to hide his excitement.

 One might naturally assume that Chailease’s growth in Vietnam came primarily from Taiwanese companies operating there, but when presented the idea in his 29th-floor office in the Saigon Trade Center in Ho Chi Minh City, Wu shook his head and laughed.

“Ninety percent of our clients are local Vietnamese small and medium-sized businesses,” says the 61-year-old Wu, who’s been in Vietnam for five years. “Managing the local market and serving local SMEs is our strategy for the Southeast Asia market.”

 Chailease Vietnam’s office is located in Ho Chi Minh City’s most upscale area, District 1, and it gives Wu a panoramic view of the Saigon River flowing by. The area across the river, known as District 2, is being planned for a major development that will include government offices.    

Vietnam’s economy has been growing at a more than 5 percent rate, and the country receives between US$12 billion to US$15 billion in foreign direct investment a year. Foreign companies have been flocking in from China, where costs are higher, to set up factories, and the bustling economic activity has spawned growth among domestic companies as well.

When Chailease entered Vietnam 10 years ago, it first relied on Taiwanese-invested companies as its main client base. But it shifted its approach as Vietnamese companies gradually emerged on the scene, opting against the Japanese and Korean leasing firms’ strategy of going after the biggest clients in favor of pursuing SMEs and making leasing deals in the US$100,000 to US$500,000 range.    

“Each deal made by big clients involves big amounts and their risk premiums on loans are relatively low, while that for SMEs is relatively high. We want to expand our client base, because only by expanding it can we absorb the higher risk premiums. If there were a bad situation, it would not shake us to the core,” Wu says frankly.

In Vietnam, companies are accustomed to borrowing from banks to finance the purchase of land and construction of factories. If they want to then buy equipment, they go back to the bank and use property as collateral to secure a loan.

“This is the opening for us, especially with SMEs. Banks cannot increase their credit lines to them for equipment purchases, so customers come looking for us,” Chailease’s Huang says.

Relying on Local Staffs

But as with any credit institution, Chailease does not simply say yes to anybody who walks in the door. Making a loan depends first and foremost on credit checks, which test the core competency of any leasing company – the ability to ferret out borrowers who will repay their loans.

Beyond asking the Taiwanese expatriates who work for the company in Vietnam to get up to speed with the local language and customs, Wu has put a premium on local hires to fill most positions and work with the Taiwanese management to serve Vietnamese clients. Of the company’s 205 employees at present, only four are Taiwanese.

The challenge has then been to train Vietnamese workers and give them the specialized knowledge on leasing and corporate credit checks and reviews they need to do their jobs. 

“When I first joined the company, I didn’t even know what leasing was,” says Nguyen Thi Thuy Hang, the manager of the company’s marketing department who was among Chailease’s first batch of Vietnamese recruits and has been with the company for eight years. To most Vietnamese, she says, banks represent the only channel for borrowing money.

But after receiving online training and classroom instruction provided by the company, Nguyen, who majored in accounting in college, quickly latched on to the fundamentals of leasing and how to conduct company credit checks.

Having armed its Vietnamese employees with the necessary specialized knowledge, Chailease allowed them to lead the way in drumming up business among local customers. In eight years, the 35-year-old Nguyen Thi has brought in 90 clients for the company and become an indispensable middle manager.

Beating the Big Boys

Three years ago, Chailease’s biggest rival in Vietnam was Vietnam International Leasing Co., a Korean-invested company that had worked the market for 17 years. But three years later, late-entry Chailease had 1,500 clients and a total outstanding loan balance double that of its Korean competitor.

“The key is that we have a broader customer base,” Huang says proudly.

With customers scattered all over Vietnam, Chailease Vietnam has now established offices in Ho Chi Minh City, Hanoi, Haiphong and Can Tho, and it plans to set up another outlet this year in Binh Duong.

Thinking back to when he was first sent to Vietnam five years ago, Wu remembers it as the most difficult period for the company. The leasing sector had traditionally fallen under the jurisdiction of Vietnam’s central bank, but when Vietnam’s economy was struggling from 2012 to 2013, the government tried to restrict credit growth and fight inflation by imposing credit controls, adversely affecting Chailease’s business.

At the same time, because of the tough economic environment, many of the company’s SME customers were facing the possibility of defaulting on their loans.

“We hired four debt collectors to try to collect the money owed,” Wu recalls.

Having survived that economic nightmare, Wu aggressively recruited staff, moved into new sectors and built an even stronger base of SME clients.

Those moves have propelled Chailease International to the top spot in total outstanding loans among all leasing companies in Vietnam, setting the stage for a potentially even brighter future.  

Translated from the Chinese by Luke Sabatier