Explosive car rental grow has Chinese lawyers and regulators talking "protection"

From Xinhua:

Car renting, scarcely seen a decade ago, is gaining more popularity and prevalence nowadays in China's big cities.

When Beijing traveller Zhang Daping and his family arrived at Xiaoshan airport in Hangzhou, capital of east China's Zhejiang Province, a brand new Buick LaCrosse sedan was there waiting for them.

Zhang booked the car online three days earlier from a local rental car agency.

"We are here on a self drive tour," Zhang told Xinhua. "With this car, it's more convenient for us to travel around than taking buses or taxies."

Currently, the sector is made up of a mixture of homegrown and foreign players. Foreign rental car giants like Avis and Hertz are doing business in the country.

Homegrown firms are usually small in scale, with 80 percent of them having no more than 50 cars.  Given the increased competition especially that from foreign firms, the smaller players are having to change.

But lawyers and regulators have designs on this dynamic marketplace:

"Incompletion of related laws and regulations is deterring the development of the rental car business in China," said Yang Gaobo, a lawyer with Zhejiang-based Zehou Law Firm, citing fraud cases in Beijing and Shanghai in recent years as an example.

"The laws are lagging behind the fast-growing rental car business to provide effective protection," said Yang.

Besides Mitsubishi, Avis, and Hertz, foreign investment in the Chinese market is coming from the Vampire Squid:

A consortium led by Goldman Sachs Group Inc. invested 70 million U.S. dollars in Shanghai-based eHi Car Rental at the end of August.

The company plans to expand its service network within one year to cover about 100 cities in the country and have more than 10,000 cars to rent out.

[Via China Car Times; photo: holidayresources.com]