(Ecnc.c)--By copying the business model of the 7 Days Inn, a budget hotel chain, Zheng Nanyan is planning to create another miracle, this time in car rental. He plans to not only catch up with the big rivals, but to also beat them down.
In 2005, Zheng established the 7 Days Inn with 8 million yuan ($1.3 million) in seed money. By focusing on low-price and high-quality accommodations and targeting value-conscious business and leisure travelers, the 7 Days Inn came out in front in just several years and went public on the NASDAQ in 2009.
Running an economy hotel chain is "a business providing better accommodations at lower cost," Zheng pointed out, adding that he planned to offer car rentals with a similar model.
Dubbed the "cost killer," Zheng, a computer engineering major and the former vice president of marketing and sales at Ctrip, a travel agency, has drawn great attention from industry insiders.
Economy car rentals
Zheng, in fact, became involved with car rental by accident. About two years ago, Zheng and Huang Ji, the then vice president of the 7 Days Inn, mentioned going into the business during a casual talk.
However, they found out that the big car rental companies in China are quite similar to each other in terms of business models, which mostly focus on corporate and private renters, long-term and short-term rentals, and self-driving and designated driving services. Vehicles also vary from low-end to luxury with rates ranging from hundreds to thousands of yuan.
They soon took the idea seriously and even went to the U.S. to learn from Hertz and Enterprise, two American giants in car rental.
In May 2009, Zheng, together with Huang and several other colleagues at 7 Days Inn, set up the Guangzhou Reocar Rental Ltd, with Zheng as the director and Huang the CEO.
With a management team from the 7 Days Inn, Zheng chose to focus on budget car rental, using a similar strategy to his economy hotels. Specifically, they only offer short-term rentals for private customers with three types of vehicles. The rate is 120 yuan ($18.8) to 200 yuan ($31.3) per day, and cars cannot be returned to another location. The tracing system is also quite simple, yet effective.
Zheng always tries his best to keep the cost as low as possible. He chose to promote the service via an online platform, and there is even no reception at any of the chain locations.
Huang Ji explained that the philosophy of Reocar is similar to that of the 7 Days Inn--to eliminate all the "unnecessary things for the customers" and target a niche market.
