China’s rent car war is heating up – in a big way. Ymer backed China Auto Rental which recently received US$150M from Legend Capital has a viable sparring partner in the billion dollar rental car ring on the back of Goldman Sachs reported US$70M investment into Shanghai based eHi Car Rental.

If you are interested, have a read of the article Wall Street Journal reporter, Jonathan Shieber, posted last week on WSJ blog Venture Capital Dispatch titled “With $70M, China’s eHi Car Rental Looks To Untangle Traffic Snarls”.

According to Shieber, eHi, in addition to operating a more traditional rental car model, is also looking to emulate Boston based Zip Car’s model (short-time inter-city rentals). I have serious doubts China is ready for this model, and that eHi is looking more at the PR value than the RMB value.

It took Zip Car almost a decade to build traction in the US, where there already was a rental car culture, a community around ride-sharing, and public parking lots conveniently located in multiple city locations; all three are still nascent concepts in China.

Let’s see how this plays out. It will be interesting, for sure. Most likely, though, you’ll see the traditional rental car model (with flavors of Chinese localization) proliferate long before Mainlanders are Zipping in and out of cars.

Today, the way digital media (e.g. video, text, and audio) is consumed in China online via search and social distribution (e.g. emailing links, blogging, etc) requires that content be virtually free to distribute and consume.

To wit, users want unprotected, legal content in quantity and at a low price.

So, one of the main barriers preventing such a content service from succeeding in China is the reluctance of major content providers to distribute their content without the protection of a Digital Rights Management (DRM) standard. Contrary to widespread belief, the fact that existing models fail in China has very little to do with the fact that illegal content accounts for more than 99% of all digital content on China’s web or the misguided belief that locals won’t pay for content, but rather because, until very recently, no one has come up with a scalable, profitable and legitimate solution that properly compensates content owners for their property.

And this is why we are so excited about our recent investment in Feilio as we believe they have the answer content providers, worldwide, have been pining for.

Feilio’s solution is a service that aggregates and distributes legal content to Chinese consumers while fairly compensating content providers for the use of their digital content.

The service works is as follows:

Content aggregation: Feilio registers content from publishers and producers of audio, video, and text media. Digital fingerprints are created to identify each media file, linked to its ownership and metadata. File usage is tracked on end-user devices using client software that also provides user interfaces, search, recommendation, and social networking functions to help people discover new media.

Content Distribution: Feilio provides content licenses to networks converting previously illegal file sharing and copying into legal activities, inoculating universities & networks against copyright infringement litigation. Users (e.g. students) need not change their current file sharing behaviors associated with free content sites.

The capital we are investing will go to scale Feilio’s platform, expand its nationwide network to +300 universities, and aggregate content.

We are thrilled to be part of Feilio, a groundbreaking company that seeks to not only remedy China’s digital content piracy problem but also ensure content owners are able to monetize file sharing.

In today’s South China Morning Post Business section Sherman So filed an article on United Automible Association titled Club hitches ride on fast growing car ownership.

“Basically, we are like Ctrip,” Mr Lu said, who sold his previous ventures for more than US$12 million. “Ctrip partners hotels and airlines and takes commission from them when customers make bookings. We partner car repair shops, insurance companies and others and take commission from them when our members require these services.”

Beijing, PRC and Medford, USA – February 2007 – United Automobile Association, China’s leading emergency roadside assistance provider, last week closed Series A2 financing.

Joining existing investors Legend Capital and Ymer Venture Capital in the oversubscribed up-round is Cross Country Automotive Services (CCAS), a leading provider of integrated vehicle and driver programs in North America serving the Automotive, Insurance, and Diversified markets for over 35 years.

This is a tremendous opportunity for UAA to leverage Cross Country’s longstanding industry-wide relationships, proprietary software platforms, and broad operational and business knowledge base. We are very excited about this strategic relationship and warmly welcome CCAS to the UAA family.

In October 2006, Beijing based United Automobile Association was named one of “Zero2IPO – China Venture 50” – most valuable ventures in China in 2006 – UAA was ranked in the top 25.

This is a fantastic accomplishment for a company just over a year old. Congratulations to UAA’s founder and CEO, Charles Lu, and his UAA team. Well done!

Last week, Goldman Sachs invested US$25 million in Chinacars.com. Goldman’s investment comes just 10-months after Series A funding.

We’re very excited that Goldman is joining the Chinacars’ family and expect great things to come in the future.

Stay tuned!

Ymer Venture Capital and Legend Capital closed a syndicate investment in Beijing based United Automobile Association (UAA) last week.

We are thrilled to be an investor in this great company which has been leading the way in China’s automotive roadside assistance (e.g. American Automotive Association) category since UAA was founded a little over a year ago. (Before you pass judgment on the “…a little over a year ago” keep in mind roadside assistance is an emerging segment in China that only took hold a couple years ago.)

We have been big fans of the company for a long time, specifically because we believe the management team, led by seasoned entrepreneur Charles (Zhengyao) Lu, has demonstrated time and time again that they are capable of immaculate execution on the back of solid domain knowledge.

Furthermore, we believe there are heaps of synergies waiting to be tapped (and developed) between UAA and our other automotive investment, Chinacars.

We plan to write a longer post about this investment in the next couple weeks explaining what we like about UAA, where we see roadside assistance and China’s overall automotive business heading, and what we hope UAA will become.

In the meantime, there are a number of car related blogs that we’ve posted over the past year which should provide a short-term fix.

I unintentionally overlooked thanking Jacqueline and her colleagues at Sukamishi, the US based design firm responsible for designing Ymer’s fresh new logo.

Aside from designing logos, Sukamishi also does a lot of very cool multi-media work – including a recent TV spot for Pepsi Cola produced for the China market.

So, for the record, thanks for doing a wonderful job!