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First Car Rental JV Set up in Shanghai
China's first car rental equity joint venture was established in Shanghai yesterday.

The new business, Anji Car Rental & Leasing Co Ltd, is jointly owned (50/50) by Shanghai Automotive Industry Sales Corp (SAISC) and Avis Europe Plc, which represents the US-based car rental giant Avis.

A total of US$66 million will be pumped into the new firm, which has registered capital of US$22 million.

The company will take over the existing fleet of about 1,000 vehicles from Shanghai Anji Car Rental Co, a subsidiary of SAISC, and operate its business under the brand of "Avis."

By relying on the management expertise, technologies and partnership resources of industry giant Avis, the new firm expects to establish over 70 car rental outlets nationwide, which will also be linked to the multinational's global networks.

"The new joint venture indicates that the domestic car rental sector has begun to get more closely connected with the global market and multinational players like Avis," said Ye Yongming, general manager of SAISC and also board chairman of the new company.

The firm's birth also signals the resolution of SAISC's parent company, the Shanghai Automotive Industry Corp (SAIC), to tap into the huge potential of the domestic auto service market, according to SAIC officials.

Industry observers believe the joint venture shows that China has begun opening up the domestic auto service sector to foreign companies after the country's entry into the World Trade Organization (WTO) last December.

Avis is not the first foreign player to enter the domestic car rental market.

The world No 1 car rental firm Hertz, owned by US auto giant Ford Motor, launched its operation in China in January after signing a licensing agreement with China National Automotive Anhua (Tianjin) International Trade Co Ltd. The US-based company now operates 10 outlets in Beijing, Shanghai and Guangzhou.

"Avis's entry will give us a sort of push to better cater to customers with our services," said Jin Long, managing director of Hertz's Shanghai operations.

The Chinese market is a promising one for multinationals like Avis and Hertz, though they may have a bumpy ride for several years because the domestic car market is still immature, according to Hu Muqing, a local industry observer.

(China Daily December 19, 2002)

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