1. Zip Car to China Marketing from A Global Perspective
EXPANSION TO CHINA
Zip Car to China
Marketing from A Global Perspective
April 20, 2010
Andrew Haas Julio Rios Julia Crofts Hyeon Seong Jeong

2. The Facts
“Expanding car ownership, heavy traffic and low-grade gasoline have made autos the leading source of air pollution in major Chinese cities.”
In 2007, “only 1% of China’s 560 million city dwellers breathe air considered safe by the EU.”
160 million people are licensed to drive cars nationwide yet private car ownership only amounted to 30 million in 2009.
nytimes.com
Chinese car factories are working
24/7 yet they still fail to reach demand
China Daily
Beijing local government recently raised
vehicle taxes by 2.5% and increased
parking fees by 20%
- eBeijing.gov
EXPANSION TO CHINA

3. EXPANSION TO CHINA

4. What is Zipcar?
A streamlined car rental service for individuals, businesses and universities
Zipcar is located in 50+ cities across North America and the USA
A Zipcar can be rented for as little as one hour and up to an entire day
A large variety of cars are available to rent: luxury, hybrid, trucks
Cars can be booked through website and mobile phones and are picked up and dropped off in local neighborhoods
EXPANSION TO CHINA

5. How Does Zipcar Work?
Drivers apply online and are usually approved in 24 hours
A zip card is issued to the approved driver, which is the equivalent of a car key
RFID technology is used to open and close the rented car at an appointed time and place
Cars can be rented at an hourly or daily basis
Gas and insurance is included in the original price and the car can be driven up to 180 miles a day
EXPANSION TO CHINA

6. Benefits and Growth
Zipcar users report an average savings of $500 per month
Every Zipcar takes cars off of the road
10% of the population is expected to adopt car sharing over the next 5 years
In 2009 Zipcar reported sales of a 120 million dollars, this number is expected to grow to 1 billion in the next decade
An IPO is planned for 2010, and an average of 7,500 new members join each month
EXPANSION TO CHINA

7. Market Entry Strategy
Objective: Within one year, establish market share through building new consumer base among young professionals by providing an affordable and convenient rental service.
Joint Venture: BYD Auto
Leading Chinese car and
battery manufacturer
F3 sedan China’s best selling car in its class
Fully electric with zero emissions
Range 200 miles
Mutually Beneficial
Help alleviate China’s congestion and pollution problems
Zipcar will benefit from local knowledge of BYD Auto
BYD Auto will have access to US market
EXPANSION TO CHINA

8. Target Market Young Professionals University Students Young families
Under 30 years of age
Seeking status of owning a car without income to purchase one
Greater awareness of environmental issues
Aren’t as concerned with car as “status”
Goal: To cultivate new consumer trends
University Students
18 to 22 years of age
Cosmopolitan and aware of foreign trends
Value of brand loyalty in long-term
Enjoy the freedom of driving, but can’t afford it
Young families
Need extra space for young children
Ability to shop at stores further from house (i.e. Wal-Mart)
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9. Beijing
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10. Beijing-Economic Overview
During the 1990’s industrial GDP grew 20% a year
GDP/capita was twice that of other possible test markets--ability to rent from Zipcar
Source: China City Statistical Yearbook 2006; McKinsey Global Institute Analysis; Starmass Consulting
EXPANSION TO CHINA

11. Beijing-Advantages Largest city in China
Local government favors enterprises to improve selling networks
Large metropolitan area, public transportation can be inconvenient
Large population of target market- i.e. young professionals
Traffic congestion and air pollution particularly troublesome
Source: McKinsey Global Institute Analysis
EXPANSION TO CHINA

12. Short-term Competition
Personal car ownership
Public transportation
Taxis and other chauffeured cars
eHi’s FastCar in Shanghai
Requirements: valid drivers’ license & 3,000 RMB deposit
Online reservations
40 RMB per hour or maximum of 320 RMB per day (includes insurance but not fuel)
EXPANSION TO CHINA

13. Long-term Competition
Hertz
Partnered with China National Automobile Anhua International Trade Company to enter Chinese rental car market
“Connect by Hertz” recently launched in New York, London, and Paris
$50 annual membership including insurance, fuel, roadside assistance, maintenance, universal key card
$10 per hour rental fee
Anji Car Rental and Leasing Company
Joint venture between Shanghai Automotive Industry Corp and Avis Europe
“Free traveling, unbounded city”
Currently in 30 locations in 19 cities including Shanghai, Beijing, and Guangzhou
Projected growth to 110 locations by 2012
“Renting a car when people need it might be a better choice to help the climate and the planet,” said Pascal Bazin, CEO of Avis Europe
EXPANSION TO CHINA

14. Challenges Faced Contracts with insurance providers must be obtained
A verification system must be developed to ensure new Zipsters have an approved drivers license
Barriers to entry for foreign firms in China
Registration as a rental car company
Resources: US Consulate, AmCham
Local Government
Contracts with insurance providers must be obtained.
A verification system must be developed to ensure new Zipsters have an approved drivers license.
Zipcar will be required to obtain registration as a rental car company, which has required partnership with a Chinese Owned company for other western car rental companies.  
The US consulate and AmCham are two resources available to help pre-qualify potential Chinese partnership companies. Additionally, it would be advantageous to begin developing a relationship with Deputy Governor Ding Zhejun.
EXPANSION TO CHINA

15. Government Motivation
Demonstrate to the World China’s green initiative
Shanghai Expo 2010
Push for private-owned business
More business = greater prosperity
Alleviate some of Beijing’s most pressing problems
Source:
At a meeting of Government Leaders of Cangnan and the Organizing Committee of International Development Information Network Association for the Expo 2010 in Shanghai, Deputy Governor Ding Zhenjun said he hopes the expo will help bring new industry to Cangnan.
Additionally, the Cangnan Government and enterprises have been encouraged to bring in advanced technology to promote rapid growth of business and to build Cangnan into a more vigorous place for private-owned enterprises and a more prosperous home for all its citizens.
EXPANSION TO CHINA

16. Benefit for Beijing & China?
Future transportation challenges
Early start on quality system
More business = more prosperity
A long-term plan
Example for the rest of China
Source:
With the push for growth in Cangnan, the future may hold many of the transportation challenges that Shanghai faces to the North.
Approaching the local government with preventative options such as Zipcar early on can help develop Cangnan with a positive image around transportation and attract more business to the city.
Improving the lives of Cangnan’s citizens by adding an additional transportation choice and helping to prevent a rapid increase in congestion and automobile related pollution.
Working with the local government for a long term including Zipcar in their future transportation planning
Leverage the opportunity to show the rest of China the intelligent transportation planning and improved quality of life.
EXPANSION TO CHINA

17. Conclusion TBD Questions
With the push for growth in Cangnan, the future may hold many of the transportation challenges that Shanghai faces to the North.
Approaching the local government with preventative options such as Zipcar early on can help develop Cangnan with a positive image around transportation and attract more business to the city.
Improving the lives of Cangnan’s citizens by adding an additional transportation choice and helping to prevent a rapid increase in congestion and automobile related pollution.
Working with the local government for a long term including Zipcar in their future transportation planning
Leverage the opportunity to show the rest of China the intelligent transportation planning and improved quality of life.
EXPANSION TO CHINA