China’s sharing economy start-ups vault into variety of ventures

By Zhang Ye Source:Global Times Published: 2017/5/14 17:48:39

From bikes to batteries to basketballs


The sharing economy has taken off in China. The industry has branched out from ride-sharing and bike-sharing platforms to new ventures that offer to share umbrellas, portable battery chargers and basketballs. The industry has received its share of cheerleading over the last year or two, but at least one expert believes that a bubble has emerged. Concerns about blind investment have led to calls for government oversight.

Photo: CFP



The concept of the sharing economy may have emerged in Europe and the US, but China remains unmatched for its variety of sharing start-ups.

The most recent explosion in the sharing economy arrived in the form of portable battery chargers, or rather a network of vending machines where people can rent and return portable battery chargers. These vending machines have sprung up at airports, shopping malls, restaurants and cinemas in many large cities in China.

Li Qi, a 30-something white-collar worker in Beijing, tried out one of these machines in March while having a drink at a local coffee shop.

She scanned the QR code on one of the machines belonging to Shenzhen-based start-up Jiedian Keji. After a few seconds, she received a portable charger that she could use for free for the first hour.

"It's really convenient and necessary nowadays because the batteries in most smartphones can barely last the whole day," Li told the Global Times Thursday.

Li is one of Jiedian's 1 million users in the 10 or so first- and second-tier cities where it operates.

Slew of services

Portable battery chargers are just one of many new sharing economy businesses that have recently launched in China. Another is Molisan, a Shanghai-based start-up that rents umbrellas to commuters to keep them from getting soaked in the rain.

Commuters can rent an umbrella from one of Molisan's vending machines in Guangzhou, capital of South China's Guangdong Province, and Fuzhou, capital of East China's Fujian Province. It costs 1 yuan ($0.15) to rent an umbrella for 12 hours, on top of a 20 yuan deposit, Molisan said in a microblog post Thursday.

Meanwhile, Zhu Le Ge Qiu, a start-up in Jiaxing, East China's Zhejiang Province, hopes to turn the basketball into a rentable commodity.

The company, founded in late April 2017, said in a microblog post on May 5 that it aims to roll out its services in more than 80 percent of China's indoor stadiums.

Start-ups' aggressive foray into the sharing economy dates back to 2014-15, when the concept took hold in 10 sectors and more than 30 sub-sectors of China's economy, according to a report that the Tencent Research Center released in March 2016.

In 2016, about 60 million individuals engaged in sharing economy businesses in China, up 20 percent from a year earlier, according a report that the State Information Center's Sharing Economy Research Center (SERC) released in February.

Established companies have also dipped a toe into the sharing economy. State-owned Beijing Shouqi Group, one of the leading players in the swelling car-sharing market, launched its electric car-sharing app Gofun ­Chuxing in 2015.

After launching its business in 2016 in four cities, including Beijing and Shanghai, Gofun plans to expand into another 16 domestic cities by the end of 2017, company Chief Operating Officer Tan Yi told the Global Times Thursday.

The SERC predicted that more than 100 million people will be participating in the sharing economy by 2020.

Sharing the wealth

The sharing economy could prove to be promising, especially at a time when China's economic growth has slowed. Bolstered by China's Internet Plus initiative, the sharing economy offers a new business model that can help efficiently utilize idle social resources, said Zhang Yi, CEO of Guangzhou-based market consultancy iiMedia Research.

In his 2016 book, Tencent Holdings CEO Ma Huateng wrote that China's sharing economy has entered a golden age.

That same year, China's sharing economy businesses saw total sales jump 103 percent to 3.45 trillion yuan, according to the SERC report.

Changing consumer trends are driving growth in the sharing economy in China. "Chinese people, especially young people, are prone to save money by sharing instead of owning products," Zhang told the Global Times on Wednesday.

In March 2016, the Chinese central government work report highlighted the sharing economy, indicating the industry's development was a priority and worthy of government support.

The State Council had issued guidelines in May 2015 that encouraged the government to set up a sharing economy platform to promote and optimize manufacturing resources and market information.

The SERC report forecast that the sharing economy will grow at an average annual rate of 40 percent over the next few years to account for more than 10 percent of China's GDP by 2020.

Oversight needed

However, analysts warned of problems in the sharing economy and called for government regulations.

Some start-ups do not really want to offer sharing services, but just aim to acquire capital by adopting a trendy business concept, Zhang said. It works because investors are tripping over one another to fund sharing economy start-ups.

"Domestic investors will rush into any business as long as it is related to the sharing economy," Zhang noted.

The portable battery changing rental business illustrates the investment frenzy. After Jiedian announced that it had been acquired for 300 million yuan by the US-listed online cosmetic shopping platform jumei.com on May 4, three other start-ups offering similar services announced their own fundraising plans.

Over a 40-day period earlier in 2017, businesses that provide shared portable battery chargers raised nearly 1.2 billion yuan, almost five times the amount raised by the bike-sharing industry in 2015, Caijing Magazine reported Wednesday, citing an unnamed insider.

Wang Sicong, chairman of ­Prometheus Capital and son of Chinese tycoon Wang Jianlin, has cast dispersions on the prospects of the portable battery charger sharing business, saying in colorful language that the business would never make a profit, according to a report on the news portal 163.com.

Zhang said the sharing start-up industry is in a bubble that will eventually burst.

After all, many start-ups in China are mired in homogeneous competition because they don't have profit-­enabling business models, noted Zhang.

In its 2017 government work report, the central government said it would work to "support and guide the development of sharing economy" in 2017.

Posted in: INSIGHT

blog comments powered by Disqus