China's ride-sharing market moves past obstacles towards growth potential

Despite experiencing some early setbacks, China's car-sharing market is expected to see significant growth opportunities as mobile internet adoption increases and the relevant laws improve.

In a report released Monday, the China Internet Network Information Center (CNNIC) said "car-hailing services" faced "more obstacles than driving forces" between 2010 and 2013, due largely to regulatory restrictions, an undeveloped market environment, and a lack of familiarity with mobile access among the general public.

The center's study determined that "policies and public opinions" then were against the idea of car-booking services, and few in China had developed the habit of accessing mobile internet. In addition, market places faced much resistance from restrictive policies, though, some restrictions since had been lifted--with some conditions.

On a positive note, technological advancement and the country's economic growth had helped drive this space, the CNNIC report said. Over the last two years, the market saw demand boomed as drives looked to make better use of their cars and riders sought out travel efficiencies. Service providers also ran marketing campaigns, offering subsidies to encourage the public to adopt ride-sharing services.

In addition, car-sharing services were well-positioned to tap China's established O2O (offline-to-online) economy, benefitting from easy access to location-based data and payment services on mobile devices.

"They have good market opportunities in large and medium-sized cities...[where] taxi capacity is relatively low and roadside parking space falls short of demand. This contributed to the user stickiness of car-hailing services to some extent," CNNIC said. It added that car-sharing apps saw high interest among large local internet companies and car rental operators.

According to the report, Didi Kauidi led the market with a 87.2 percent share. As of June 2015, some 21.65 million people had used car-sharing services, with the majority of riders earning a monthly income of between 3,000 and 5,000 yuan (US$455.89 and US$759.82).

Some 23.3 percent of users of car-sharing services did so to get around, with 55.1 percent hailing cars when they were unable to find a taxi.

"As mobile internet booms, major car-hailing service providers create innovative business models in order to meet people's transportation demand," the CNNIC report stated, adding that as relevant laws and regulations improved, the transport market would increasing integrate online technologies to improve its service offerings.