Chinese Style Sharing Economy
The Shared Bikes
Since this year, the rainbow-colored bicycles have taken over the streets and sidewalks of cities in China. They are operated by different startup companies. By downloading an app and scanning a QR code, you can easily rent a bike at a price as low as 1 RMB/hour (US$ 0.15).
Assisted by latest technology, the brilliant essence of these shared bikes is that you can take and return them anywhere publicly. In a country with large population, high penetration of smart phones and mobile payment, shared bikes have gained tremendous progress throughout the country.
There are over 20 brands of shared bikes in the market, but MoBike and Ofo are two most well-known ones which pervaded all the first-tiered cities such as Beijing, Shanghai, Guangzhou and Shenzhen.
When nothing can’t be shared, people start to question: Is it really a shared economy or rental business?
Shared bikes and Didi Chuxing, a local ride-hailed app squeezed out Uber last year, are two miracles of China’s sharing economy. China was seen a whopping US$500 billion worth of transaction in sharing economy in 2016, according to a report released by State Information Center. The size of this field is expected to grow by 40% annually in the next few years, accounting for over 10% of domestic GDP by 2020.
Other “Shared” Businesses
If you think Chinese’s imagination only goes this far, you are totally wrong. After the success of shared bikes, more and more rental commodities emerge in the market. Shared power band, shared umbrella, shared air conditioner, shared fridge, shared basketball and shared folded stool are just a few odd examples.
The shared portable battery is probably the best student of shared bikes. Placing in shopping malls, coach/railway stations, restaurants and other public locations, they have the same concept as shared bikes. Scanning a QR code with a mobile app, you can rent a battery to charge your phone at the cost of 1 RMB for an hour of use.
Barly launching for half a year, shared power band startups had received generous funding from venture capital. Laidian secured US$20 million in series A funding earlier this year while Ankebox raised US$14 million in series A funds.
Shared umbrella and folded stools are facing a critical problem. They have been reported stolen. Over 300,000 shared umbrella were lost shortly after they were launched and nearly half of stools appearing in Beijing’s bus stops and railway stations had gone missing.
Share or Rent?
When nothing can’t be shared, people start to question: Is it really a shared economy or rental business? The godfather of sharing economy Uber and Airbnb created their business models based on the idea of making full use of people’s idle resources like spared apartments, cars and time. They don’t actually own the property or commodities. The core value of this business model is to relocate the existing social resources to increase efficiency.
The Chinese startups possess their resources and rent them to consumers via online apps. They first see a demand for certain products or services, such as power band and basketball. Then they produce them to cater the market. This is different from the original meaning of sharing economy.
The misconception is one of the reasons that turns sharing business into an uncontrollable glorified sector. In China, the majority still earn a low salary and these low-priced commodities attract them to spend less in a short run. The market size can go to 1.3 billion of potential consumers.
Some people pointed out that another reason behind the hype of China’s sharing economy is the ability to collect big data. This is also the reason why venture capitals favor rental business startups so much.