Page 77 - How China Is Winning the Tech Race

with giant lion statues and fountains that would look more appropriate in
Las Vegas.
If Zhang is in pain from the long hours leading his car troops, Chinacars
is the beneficiary. It’s speeding along at the pace of a hot rod, clocking in at
650 employees, up from 300 three years ago. In 2004, just three years after the
starting pistols were fired, Chinacars pulled in $8 million in revenues and
broke even. Revenues climbed to
$13 million and profits to $2 mil-
lion in 2005, then zoomed to $23
“In Silicon Valley, I saw that if you put your
million and $4 million in 2006. The mind and heart into what you want to do and
year 2007 was projected to bring in you do it with passion, that can be an in-
at least a 30 percent increase to credible force.”
revenues of $35 million and profits
John Zhang,
of $6 million.
president and CEO, Chinacars
The business model is con-
structed around auto buyers’ needs.
“We identified seven major needs,
starting with a consumer who wants to buy a car. Then we go to car insurance,
accessories, maps, repairs, and selling used cars. Then we close the circle and
start again with the buying,” Zhang says. “The market is too young to be seg-
mented by each customer’s need.”
Membership fees and online advertising, two fast-growing areas, provide
most of the revenues. In the rear are referral fees from auto sellers and sup-
pliers for sales leads, a tiny percentage currently, and the recently introduced
e-commerce CareXpress service. In its first month, CareXpress got orders
from 2,000-plus shoppers for car jacks, maps, tires, and other accessories;
that’s a respectable number considering that e-commerce hasn’t caught on yet
in China. People logged on to gawk at panoramic shots of the nearly 4,000
models available today in China.
Membership fees make up about 20 percent of revenues today but should
increase as people begin to sample services that are new to China. There’s an
introductory free rate, but on average dues are $25 and VIP status costs $45.
About half the site’s revenues come from online advertising by automakers
and suppliers such as dealers, repair shops, and insurance companies, many
of them newcomers to marketing.

Chinacars.com—Cruisin’ with Chinacars 51