Despite the array of benefits, China as well as its society could easily hinder the progress of car sharing as well, due to the following variables:
1. Intense Competition from Taxis and Public Transport
– The public transport landscape in megacities is dominated by highly efficient subway routes as well as an enormous fleet of taxis. Taxis are a frequent choice for commuters due to their competitive pricing and availability. In fact, when compared to other major cities such as Berlin, a Shanghai cab will cost roughly 1/3 less, regardless of the distance traveled (Roland Berger, 2014). Additionally, taxi companies have worked in close cooperation with WeChat (the Asian equivalent of WhatsApp) in order to set up a modern taxi system similar to Uber’s business model. The WeChat App allows users to book taxis, track their distance from their location and pay the fair easily. Uber itself has also set up shop in China, which further heats up the competition, and this is before including the “Black Taxi” services. The Chinese government is also invested heavily in subway lines, as the city of Shanghai is aiming to increase the number of lines from 12 to 22 in order to cope with the overflow of commuters. With prices ranging from 3 to 8RMB, i.e. roughly 0.4-1.1 Euros, car sharing companies will need to offer competitive solutions.
Figure 1: Taxi Fares in Major Cities in PPP & RenMinBi (Roland Berger, 2014)
2. Vehicle as Status Symbol
– While this trend is certainly shifting as millennials and cost-conscious purchasers begin to move away from owning a vehicle, traditional thinkers continue to value a vehicle highly. In fact, in a recent survey, 60% of respondents agreed that owning a car boosts the social status of an individual or family, and it remains the second most important factor, following the purchase of a house (Bain & Company, 2015). This culture is unlikely to change in the near future as the middle class continues to grow,. Therefore car sharing companies cannot expect to dominate the market immediately.
3. Limited Parking
– Without government support, limited parking spaces may be the single largest hurdle that car sharing providers must bypass. In China most parking lots are privatized and owned by either shopping centers, residential compounds or office complexes. Therefore, one can expect to pay a fee either to a machine or security guard in order to park the vehicle. Adding to this, roadside parking and parking meters are not common in China, especially compared to European cities, further limiting the amount of parking. Due to this a free-floating car sharing model won’t be feasible in the near future and car sharing companies will need to compete or ensure government support for the few available parking spaces remaining.
4. Low Awareness of the Trend
– Finally, while car sharing is viewed positively amongst the Chinese population, the greater issue is simply that most people are not familiar with the concept. Seeing as there are few car sharing companies, which operate mainly in industrial/technology parks or university campuses, this does not come as a surprise. However, it is particularly concerning that the awareness and interest in conventional car sharing is very low when compared to other mobility solutions such as bike or motor scooter sharing. Car sharing companies must partner with other mobility solutions and local governments in order to capture the attention of users.
Figure 2: How likely are Chinese consumers to use these mobility solutions in the next 3 years? (Bain & Company, 2015)