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EXPANSION TO CHINA

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

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EXPANSION TO CHINA

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

  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 15-20 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 • 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) EXPANSION TO CHINA

  9. Beijing EXPANSION TO CHINA

  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’sFastCar 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 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: http://www.devnet-shanghai.org/en/news_detail.asp?myid=51 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: http://www.devnet-shanghai.org/en/news_detail.asp?myid=51 EXPANSION TO CHINA

  17. Conclusion • TBD • Questions EXPANSION TO CHINA

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