Profit Model of Metro Enterprises and Quasi-Market Based Practice of Shenzhen Metro

Abstract

The need to financially support metro enterprises stems from the amplified global enthusiasm for sustainable modes of transport. This paper analyzes the formulation and practice of the profit model based on quasi-marketing initiated within Shenzhen Metro in China. In contrast to previous studies based on a single theory, this paper employs an integrated approach in optimizing gains. Metro enterprises have peculiar attributes such as supply of quasi-public service products, positive externalities, heavy assets, low profit, economy of scale, and economy of scope. Therefore, in order to effectuate sustainable growth, the author has put forward three methods for the profit model based on the quasi-market principle: firstly, generate internal gains of positive externalities through the enterprise’s market operation on government-allocated resources; secondly, balance cost and income by modifying the accounting policies on fixed assets depreciation and financing interest; and lastly, maximize economy of scope by enhancing synergy between different business segments and sub-businesses of the same segment in the enterprise. In practice, these methods are carried out in Shenzhen Metro with innovative methods that comprise “metro plus property”, “member plus fund” and “entity plus virtual”. This study concludes that the advantages of quasi-marketing include the optimization of resources and the success in overcoming the financial restraints in metro enterprises. Through the high applicability in Shenzhen Metro, it is shown that this quasi-market principle-based profit model could enable metro enterprises to achieve self-development and sustainability.