EDITOR’S note:

Internet Plus, a concept highlighted in the government work report delivered by Premier Li Keqiang at the annual session of the National People’s Congress in Beijing in March, is pushing the boundaries of China’s traditional industries. Nowadays, enterprises across the country are embracing changes by incorporating advancements in the Internet and related technologies into their business models. In a series by Shanghai Daily, we explore how this concept is reshaping our world.

FOR an industry like automotive, which is so physical in nature, flirting with digital applications runs plenty of risks.

In fact, up to 30 percent of online-to-offline automotive-related start-ups in China have gone out of business because of money-burning subsidy policies. Bopai, once the market’s most valuable car wash and maintenance service valued at US$600 million, has gone bankrupt.

But failures don’t seem to deter newcomers who think they have better ideas.

Earlier this month, the e-commerce branch of China Continent Property and Casualty Insurance teamed up with American lubricant maker Chevron to provide online-to-offline “easy care” service. With just a click of the mouse, the service boasts, you can book a technician to change the engine oil and filter in your car — using Chevron’s products, naturally — at any of the workshops on Continent E-Commerce’s fast repair and maintenance platform.

This is a platform that aspires to become an auto industry version of Dianping or Yelp in three years, said Shang Yongtao, president of Continent E-Commerce and deputy manager of Continent Insurance.

The ambition is built upon a simple premise: channeling car insurance policyholders to reliable after-sale services. As China’s sixth-ranking insurance company, Continental’s car policies are expected to top 25.5 billion yuan (US$3.8 billion) by year’s end.

“Easy care” is free for one year or 30,000 kilometers to Continent car insurance policyholders. It can also be purchased as a stand-alone service. Chevron is the first supplier but doesn’t have exclusive rights.

After-sale services are big business in China, the world’s largest auto market. Car insurance and auto maintenance comprise the bulk of the market, which is forecast to be valued at more than 960 billion yuan by the end of this year, growing to 2 trillion yuan in five years.

An insurance company is ideally placed to expand from policy-writing into related services. With the connectivity of the Internet, all 20,000 partner workshops of Continent can now be organized under a single online platform. That strategy envisions creating a loyal customer base and creating new opportunities, like creating “quality insurance” in service providers.

“One quality insurance is provided by the Internet itself,” said Shang. “You cannot engage in any wrongdoing because you would be exposed very easily. All the workshops on our platform, no matter in what county or town, will be rated on their services by customers in the future.”

In one recent high-profile scandal, JD.com was found to be selling fake Shell lubricant in its self-run store.

Guo Baomin, an advisor to president of Chevron Lubricant, said a counterfeit-proof service procedure is critical to “easy care.” Since most car owners in China don’t know how to change engine oil, a workshop is required. After taking direct delivery from Chevron, the shop will keep the lubricant for the customer to unpack himself, ensuring that no hanky-panky has taken place.

It’s a good strategy in a market long plagued by fake products.

However, Continent isn’t looking at its repair and maintenance platform as a primary money spinner. It’s just an add-on service to its lucrative policy-writing business.

Automotive financing

Automotive financing and leasing are also going online these days. And 58.com, China’s version of Craigslist, is about to give those services a higher profile.

Last week, 58.com, the biggest classifieds marketplace in China, became a 15 percent stakeholder of LLS Leasing, an auto financing and leasing company that is also controlled by Hong Kong’s Sun Hung Kai group with a 40 percent holding, and Chinese carmaker Brilliance with 45 percent.

Chi Ye, a 50-something board member of Brilliance, said the old manufacturing industry of his generation needs the energy of new finance ideas and Internet industries.

Lee Seng Huang, chairman of Sun Hung Kai, and Yao Jinbo, chairman of 58.com, are both in their early 40s.

Buying on credit is a pretty recent concept in China. Car financing and leasing haven’t penetrated the consumer market to the same degree as in developed countries, according to Lee. But things are changing, with the rise of an open-minded younger generation that has both spending power and Internet obsession.

With financial leverage, LLS Leasing will help sell Brilliance-made cars in its initial stage, extending its influence over products of competing carmakers. Having developed its assets over 1 billion yuan so far this year, the company aims to increase the number to 10 billion yuan in the next three years.

Financing for used cars, for example, is a gold mine untapped by traditional financial institutions. The China Automobile Dealers Association forecasts sales of used cars in China will reach 29.2 million units by 2020, almost the same level as new cars.

Yao at 58.com said many of his friends have had to forego good used-car bargains because financing wasn’t as readily available as for new cars. It is a gap that 58.com wants to fill in with LSS Leasing.

“Banks only do big, bundled deals with carmakers or big dealership groups,” Yao said. “They don’t care at the moment about what they see as fragmented demand for used cars.”

Drawing on extensive reach through its popular channels for new and used cars, 58.com is aiming to recast auto financing and leasing from business-to-business to business-to-customer, and use the connectivity of the Internet to create an inclusive financial system.

Micro-business operators on 58.com may also benefit from its business-to-customer automotive financing. One needs to have a Jinbei minibus made by Brilliance to join 58.com’s removal service platform, but in the future, it may only take a driver’s license and a leasing deal.