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Global car rental giant Avis is revving up its expansion in China as Anji Car Rental & Leasing Co Ltd - its domestic joint venture (JV) - opened a new branch in Suzhou, eastern China's Jiangsu Province yesterday.
It was the second regional branch set up by Avis and its domestic partner within a month. The Suzhou outlet is regarded as the lead phase of the US-based firm's massive Chinese push, despite a company official forecasting narrow profit margins for the next three years.
"We are prepared to look at the coming three years as a startup stage, when we'll focus on fostering our business and gradually scaling up our domestic operations," said Xia Jun, who is vice-president of Anji.
Anji is a 50/50 JV set up in January between Shanghai Automotive Industry Sales Corp and Avis Europe Plc. The two sides pumped US$66 million into the venture, the first of its kind in China.
"To run a car rental business well in China, you need patience (and) in that case, we'd expect our profit margins to remain at meager levels during our infancy," Xia added, alluding to the immaturity of the domestic car rental market, which features limited public acceptance and high operational costs for car rental companies.
Yet, Avis seems resolute. It plans to set up 70 outlets nationwide by 2008 and such a network - mainly covering China's more economically developed areas - will be a huge boon for Anji, according to Xia.
The group's first regional branch was established in Guangdong Province's Guang-zhou earlier this month, and other outlets will follow in Beijing, Jiangsu Province and Zhejiang Province in the next two or three months, he said.
Xia refused to reveal specifics of the national investment plan, but said much of the money will go into the establishment of a sizable vehicle fleet to meet growing demand.
(China Daily December 29, 2003)
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