‘Kingdom of Bicycles’ embraces car sharing

Car sharing in China is mainstreaming fast, and car sharing platforms are gearing up for expansion. Analysts project a huge market potential in the future.

When car sharing started in Canada and then spread to the United States in the mid-1990s, people had no idea the business model would be flourishing 20 years later on the other side of the globe in China.

Now the share cars, mostly electric, are ready for Chinese users in minutes once they complete the required registration via an app. And in most cases, sharing costs less than traditional car rental services, which charge on a daily basis.

Gofun Chuxing, an app which provides car-sharing services in Beijing, launched by State-owned Beijing Shouqi Group, is one of the players in the swelling car-share market. With more than 1,100 cars available in Beijing, the company also offers services in Shanghai, Xiamen and Qingdao.

Wei Dong, chief executive officer of Gofun, believes that as share cars increase there will eventually be fewer cars on the road.

Wei said: “We see hundreds of cars parked around office buildings for hours until the owners drive them home after work. It is a total waste of resources.”

Gofun was founded in 2015 and the eponymous app was launched in 2016. With a 699-yuan ($101) deposit, every drive via Gofun costs 1 yuan per kilometer and 0.1 yuan per minute.

It is expected that Gofun will be available in 20 cities and provide more than 15,000 cars nationwide by the end of 2017.

Once known as the “Kingdom of Bicycles” in the 1980s, China has now taken the top spot in the car market globally, seeing more cars on the road than ever before.

We see hundreds of cars parked around office buildings for hours until the owners drive them home after work. It is a total waste of resources.

Wei Dong, chief executive officer, Gofun Chuxing

According to the Traffic Management Bureau, part of the Public Security Ministry, Chinese own a total of 135 million private cars, making about 260 million trips a day by June 2016.

To ease traffic jams, local governments have placed a limit of the number of vehicles on the road, especially in big cities such as Beijing.

Sensing the potential to cater to people who don’t own cars, dozens of Chinese enterprises have marched into the market in recent years, including Car2go, a car-sharing service provider backed by automotive giant Daimler AG.

Zhang Xu, an analyst at Beijing-based consultancy Analysys, said the share cars can offer an alternative tailored traveling choice; and the potential for the future market is great.

Zhang said: “Currently those enterprises can’t really provide enough cars to meet the demand, which shows the desire for this kind of service. I believe the market will grow in the second half of 2017 and investment will pour into the market.”

As more people choose to use car-sharing services, they have also encountered problems, such as lack of parking spaces.

In January, Beijing Shouqi announced a strategic partnership with the Beijing Municipal Road & Bridge Group Co Ltd. The deal allows Beijing Shouqi to have access to the latter’s more than 50 parking lots in Beijing’s second and third ring roads.

Tan Yi, chief operating officer of Gofun, said: “At the moment there are some problems in the market. But we also see that the public now have a better understanding of those emerging businesses. And the government is firmly promoting the use of new energy and the development of the sharing economy.”

According to Tan, service providers are expected to turn a profit after two or three years when the overall environment improves.

He said: “At that time, producing new energy cars and the operation will cost less than today. And the government may help us access more parking resources.”

This story was published with permission from China.org.cn

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