Driven by success of bikes, sharing economy is witnessing a chaotic expansion

By Liu Caiyu Source:Global Times Published: 2017/7/25 18:43:39

A woman prepares to take a rest in a shared capsule located in Zhongguancun, Beijing on July 14. Photo: IC

The recent shutdown of the shared sleeping capsules has raised questions about the sharing-economy, a business model that has been replicated across fields in China - cars, umbrellas, karaoke and now sleeping - after the success of shared bicycles.

By simply scanning a QR code, users can take a nap in a white-colored capsule.

Disposable beddings are available for hire. Air fan, reading lights and power port are installed inside the 2-meter-long, 1-meter-wide and 1-meter-height capsules. The service charges are 6 yuan per 30 minutes during regular hours and 10 yuan per 30 minutes during rush hours.

However, Beijing police said these capsules, which can be used by anyone without ID registration, are likely to become hiding places for criminals, and their small size also makes it difficult to ensure fire safety, the Xinhua News Agency reported.

Confusing categorization

Billed as sharing economy, the so-called sharing capsules are actually a traditional economic model of low-end services, which is widely seen in airports and other countries, Liang Haiming, chief economist of China Silk Road iValley Research Institute, a Guangzhou-based think tank, told the Global Times.

Capsule hotels are widely found in Japan.

"The term sharing economy has been abused for anything that is out there for renting, while the essence of the sharing economy is to create value by exchanging idle resources and benefit the wider public to build on an economic scale," Liang explained.

The popular Mobike and Ofo are good examples of sharing economy, he added. However, the shared capsules, which are mostly installed around business districts and Internet bars in Beijing, Shanghai and Chengdu, target white-collar workers who want to take naps in daytime.

Dai Jiangong, CEO of Beijing Xiangshui Technology, which is behind the shared sleeping pods, said the shutdown is temporary.

"Local authorities will allow us to make some adjustments and then reopen. For example, we will install a smoke detector in the capsule. We are also discussing changes to our business model," Dai was quoted by Xinhua as saying.

Beijing police said the capsules are venues offering resting places, so they need a hotel license, and a hotel needs to be equipped with firefighting equipment.

Dai rebuked that since the capsules are not open to the public at night, they should not be categorized as hotels, the Legal Daily reported.

Gray areas

Some sharing economy enterprises have been operating in gray areas due to an absence of laws and regulations, Liang said.

"The economic model has uncontrollable risks since it separates "ownership" from the "right of usage" and regulatory supervision is absent," he noted.

Incidents of shared bikes from Mobike and Ofo being discarded and damaged have been widely reported in China's cities. Chinese netizens have expressed concerns about the hygiene of the capsules and use of such places for illicit activities.

"The sharing economy is still at a nascent stage. Rules and regulations will be gradually enacted. The viability of the economic model will be determined by the market," Zhang Yi, CEO of iiMedia Research Institute, a mobile Internet consulting agency, told the Global Times.

Enterprises with products for which there is market demand and with sustainable capital chain can usually be successful in sharing economy. And these enterprises can also survive under strict legal or administrative management, Zhang noted.

"Playing with money" is a normal method for sharing economy and for the startups to develop the market, but once the market matures, their survival will depend on the quality of services, Liang said.

The State Council 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.

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

The sector will enjoy easier access, greater policy transparency and better protection of legitimate rights of platform companies, resources providers and consumers, Xinhua reported.

Zhang said sharing economy will be concentrated in fields where resources are imbalanced, such as education, traffic, dining or garments. The sharing economic model can fully mobilize idle resources and promote social equity.

A report released by the State Information Center predicted that the sharing economy will grow at an average annual rate of 40 percent over the next few years and will account for more than 10 percent of the country's GDP by 2020.

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

Newspaper headline: Shared uncertainties

Posted in: SOCIETY

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