Parking Digitalization in China


Parking Digitalization in China

A revolutionary transformation has been taking place in the parking industry in China during the past 4-5 years. Traditionally, like everywhere else in the world, you need to stop at the entry gate of a parking garage and pull a ticket before you can enter. And when you leave, you need to find a cashier or pay on foot machine to pay the parking fee. However, much of this has changed dramatically and completely with new disruptive technologies. 

Today, you can hardly find a parking garage which is not ticketless and cashless. Hands free access and extremely fast pass through at entry/exit gates has tremendously improved customer experience; no queues and no more waiting time. No need to look for a cashier booth or payment machine either; the parking fee payment is only a matter of scanning a QR code or 1-2 clicks on your smart phone. 

Even validation can be conveniently done on your mobile. For some parking sites, when you walk by the cashless payment LCD panel hanging on the wall of the lift lobby, the LCD panel will automatically show your vehicle image, your license plate number, and your parking duration details and fee, etc. If you have linked your facial identification with your vehicle LPN, you will only need to speak to the machine, saying: “charge is confirmed”. 

It is a futuristic experience with only one voice message making the payment of parking fee without you even touching your smart phone. For regularly visited parking sites, you can simply drive in and out without doing anything. The parking fee is automatically calculated and charged to your WeChat or Alipay wallet with all details of entry/exit time, hours parked, parking fee charged, and electronic invoice is mailed to your designated E-mail box. 

Two disruptive technologies, AI technology and digital payment, have made all of the above possible and they have changed the parking industry in China entirely. In addition, the cloud computing together with reliable network access has made the peripheral devices extremely simple and reliable. Majority parking sites have no need for entry/exit lane controllers and local servers anymore since the cloud-based system is much more reliable, secure, and easier to access for required statistics or management reports. 

As a result, these new technologies have not only improved customer experience, but raised the productivity of parking operations in China unprecedently. Especially with the centralized management center, which connects to multiple sites of several hundred or even several thousand, you will only need a handful of staff to manage many hundreds of unmanned parking sites remotely. 

License plate recognition is, in fact, a old technology. It was introduced about 25 years ago (back in 1996 at Intertraffic). But it has only been used as an add-on tool for the lane peripheral device for a limited number of parking applications because the recognition rate was not that great for many years. 

However, this has changed since 4-5 years ago when the cost of AI chips reduced dramatically, which made it affordable for each individual camera to have its own built-in AI chip for LPN recognition. The AI technology has helped to raise the recognition rate dramatically to almost 100 percent. With one out of 1,000 vehicles or more, you might get one digit not correctly recognized by the algorithm, but even then, the system can quickly bring up a few vehicle images with closest number plates matching yours to let you pick up your vehicle and proceed to payment

The whole transformation was driven by the new parking players of mobile internet, fueled by large investments from venture capitalists entering the parking industry. The idea was to quickly acquire a critical mass of the parking sites by offering free parking solutions to the landlord. With most parking sites in a city using their system, they would be able to use the data and monetize it for various revenue streams. However, these new business models did not fly even though one of the largest new parking players reached a market cap of over CNY 8 billion (USD 1.2 billion) in their last round of capital raising in 2019.

Parking is an extremely fragmented and competitive market in China with over 500 players. Even the largest player in the market with an annual turnover of USD 205 million, it is estimated that they would only have 5-8 percent of the market share. Therefore, the idea of reaching the critical mass by a new internet player could never be realized to deploy the ideas they had initially.

At the peak of this new mobile internet wave back in mid-2018, there were about 110 new internet players with similar business models. Today, 95 percent of these players have gone bankrupt, or have been bought over by the larger players, who had subsequently turned themselves into parking operators/or parking system providers. 

However, the changes made by the investment into these new ideas using disruptive technologies of ticketless LPR and cashless payment live on. And they did create a hard time for all the traditional players in the industry. Some of the traditional players were completely run out of business. Many had experienced dramatic revenue drops due to the end of traditional hardware sales including the ticket dispenser, ticket validator, APS machine, and so on. 

Today, the horizon of the parking industry in China has changed completely. The business model for traditional system suppliers, or parking operators, or new internet players are streamlining to the PaaS, SaaS or, in addition, to providing online parking management services by a call center.

At the end, the customer experience is improved, productivity has been raised at least 5-8 times thanks to the new technologies and innovations made by the players in the industry. Such changes are gradually spreading around to other Asian countries at a fast pace.

Richard Zhou is CEO of Cytel (Subin) – Shanghai, China. He can be reached at 


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Richard Zhou
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