Within Europe, Avis is predominantly known as a car rental firm, offering short-term hire to meet firms’ adhoc needs.

The rental giant has a somewhat different profile in Asia, however, including China where it has been present since 2003 through a joint venture with Shanghai Automotive Industry Sales Corporation (SAISC).

Xavier Gernaey, general manager – Asia, comments on the company’s set-up: ‘In China we are not just a car rental company – we are much more than that. We provide a full range of transportation solutions such as leasing services and short-term rental with or without driver as well as point-to-point transfers.

He goes on to explain: ‘Leasing is popular because you have a lot of foreign investment looking for medium term service offer for their expatriates’

In fact, if you look at the firm’s turnover, currently 80% is leasing, 20% is short-term rental – very different to the European business model.

However Mr Gernaey says the market is rapidly moving on and that the percentage of turnover attributed to rental could well increase to around 35% or 40% in the coming years.

‘We see some big foreign investment into a few Chinese car rental businesses and this is now driving a change in the market through the behaviour of the customers . A new market is rapidly emerging. So the vision we had 12 months ago needs to be constantly revised, and I would say almost on a quarterly basis.

Avis China was set up as  a join venture was as part of mandatory rules that required foreign investors to establish a join venture with a Chinese partner at the time of the launch since the car rental industry was qualified as a strategic sector by the Chinese government.

But as well as being a requirement, having a Chinese partner has proved to be a boon when it comes to helping with local knowledge and culture, according to Mr Gernaey.

He comments: ‘There are major cultural differences in the way business is done in China, although the market is changing too and what was true five years ago is not true today anymore. But nevertheless it’s still a market where you need a lot of relations and presence.

The automotive market in China is the world’s fastest-growing and certainly there has been a lot of growth in the figures for Avis China. The firm started off with around 600 vehicles in 2003 and, at the end of this January, had over 5,200.

Mr Gernaey says: ‘The growth rate is now around  20% – so we are 5,000 cars now, we expect to be over 6,000 at end of the year. And by 2015 our aim is to reach 12-13,000 cars.’

In terms of leasing partners, Avis China works closely with its existing customers in Europe: ‘I would say that we try to extend our worldwide partnerships into China as well. And stick to our motto “servicing our loyal customers everywhere”.

‘On the short-term rental, this is a little different because we start to penetrate the local Chinese B2B and B2C market.

 According to Mr Gernaey, Chinese companies will use short-term rental for the same reasons as firms in Europe do, for example to cater for a special mid term project or support travel needs.

Out of both the rental and leasing products supplied by Avis China, 50% of the vehicles come with a driver. This is shown by the staffing levels of Avis in China, which employs around 2,800 people, of which 2,500 are drivers.

Leasing services typically cover everything to do with the car, from insurance to maintenance and tyre repairs/replacements. Additionally the firm offers a 24/7 hotline service in English and Chinese.

Avis China is based in Shanghai and is now present in 28 cities and 40 locations, with an average of one more location opening every two months. However, Mr Gernaey says that the business plan for opening new locations works quite differently to other countries, due to the lack of reliable market data on China.

‘We go into a city, we start it, we see if business is coming in. If business is not coming in, we can close it and we don’t lose a lot of our investment. If it is normal and it is growing then we can continue and we can develop this city. Trying and testing the market is probably the best return on investment we can have”.

In terms of competitors, Mr Gernaey says the main rivals come from the local rental firms.

He explains: ‘In each of the cities you have one big competitor that is a kind of a spin-off of a state-owned company. So if you go to Beijing, we have one big competitor in Beijing. If we go to Shanghai, we have two big competitors in Shanghai.’

However, he says that there are also more foreign investors coming into the fast changing market and working with local companies, operating on a more nationwide level.

So what are the main challenges that Avis China is facing?

‘To me the main logistic problem we have is the extension of the network – China is not a country, it is almost a continent. If you compare China with Europe, it goes from Edinburgh to Munich, from Copenhagen to Barcelona. So we have teams in Barcelona and we have a team of 50 people and 100 drivers in Copenhagen and we have the same in Munich and the same in Edinburgh.

‘We are very keen to provide high-end service standards and the main challenge we have is to make sure that in our 28 cities we have the same quality level.

So is customer service Avis China’s USP?

‘Yes, definitely. We are a premium brand and we want to provide premium service to our customers. Safety, insurance, maintenance of the cars; these are really a top focus of what we are doing.

And what are the company’s future targets?

Mr Gernaey says: ‘The priority of us now is to enter into the Chinese domestic market – corporate but also individual. We have a very good brand – well known internationally – but we still need to penetrate the mainland of China with our brand, which will take a little bit longer.

‘We are very well established with the foreign-invested companies – we have good processes that we continue to improve, we are recognised and this is a market that will develop by itself – but the focus needs to be on the self-drive rent-a-car business for the local domestic market,’ he concludes.