China’s sharing economy is here to stay

Mayor of Shanghai Ying Yong set a goal of bolstering “the city’s livability,” according to China Daily. As a direct result of this goal, we now have “the sharing economy.” From bikes and cars to battery packs and umbrellas, the spectrum of products offered on China’s sharing economy has become a ubiquitous part of everyday life. When one walks down the streets of Shanghai, it’s impossible not to see one of the aforementioned services. The sharing system is here to stay, especially with the prevalence of digital payments in China. According to Bank Innovation, WeChat processed US$1.2 trillion in 2016, a hundredfold increase from 2012. The ease of payment, governmental support, and increasingly selective consumers concentrated in urban centers make it very likely that this new sector will thrive in China.

Today, Chinese consumers are willing to spend more on luxury goods, and to do so, they must save on other aspects of their spending. There is a growing market consisting of people who have become increasingly wary about spending their money. According to research conducted by major research consulting firm McKinsey, an increasing majority of Chinese consumers are willing to spend more money on the “most expensive and best product [in their price range].” They are becoming more considerate and careful with their purchases. This means that they will be more likely to spend save money on things that can be rented—such as bicycles—and instead invest that money into other luxury goods.

Paying is also easier than ever before. According to Mobike, users can withdraw or make a deposit via WeChat or Alipay at any time. The prospect of receiving an instant deposit refund on the go provides these electronic services with a significant advantage over traditional rental systems. As senior Bamboo Tsai (12A) said, “I will miss WeChat pay [when I leave Shanghai].”

Besides consumers, the sharing economy also provides financial incentives to the government. For example, by permitting a privatized bike-sharing scheme, the government no longer has to invest public funds on separate, costly programs. Indeed, it is rather difficult for the government, which must be held accountable to its taxpayers, to compete with private corporations which are more focused on gaining a market share at all costs. For the Zhangjiang fixed-parking-location shared bikes, the deposit is 300 RMB according to the website of the Forever Bicycle Rental company. In contrast, ofo—a leading bike sharing company—they will waive the deposit for consumers with high scores in Alipay’s Sesame Credit system.

The sharing economy reduces the costs that must be expended by the government to provide city services. Although there are concerns regarding the disorder caused by messily parked bikes, this is yet another problem that is more easily solved by controlling private corporations: the government can simply issue regulations against these companies. According to Forbes, the local and national governments have promulgated rules regarding maintenance and parking; and so far, these have been effective: for example, Yongjiu eBike says that the parking of its bikes is controlled by a system in which users must park within the boundaries of a GPS fence or face a 10 RMB fine.

With a growing market, likely government support, and the prospect of effective regulation, it is certain that the bike sharing system—and the sharing sector in general—will continue to expand. Some students think that they will miss the bike sharing system. Wai Yan Kwok (12A) said, “It’s like Harry Potter’s attitude to Snape. In the beginning he didn’t really care much, [but] when Snape finally left him, Harry realized that Snape was a part of his life he will never have back.”

Featured image Mobike on the street courtesy of Jon Russell via Flickr