China’s Sharing Economy Has More in Store
“So..you can just rent that external phone charger there?”
“Yeah, of course.”
“How do you…return it?”
“WeChat. You can pay from WeChat here, and return it at the next metro stop.”
“After your phone is charged?”
“Of course.”
Sharing economy startups have been popping up all around the world for years, offering new ways for communities to exchange their goods or services. Internationally, they have been decentralizing commerce, creating unicorn companies, but in Mainland China, the wave is just as powerful and you probably haven’t experienced it yet.
In the United States, “You have companies like UBER, who serve as the world’s largest ride-sharing company without owning any cars, Facebook who could be called the world’s largest media company without creating any of its own content, and even Airbnb as the world’s largest accommodation provider, but owns no hotels.” — Brock Pierce, Block.One
In Mainland China, this trend has become a way of life (and a ~300 billion dollar industry). From bikes, to external phone chargers, umbrellas and even treadmills in a box, entrepreneurs are creating new ways to rent out products or services people need. Sure, there have been a few failures. But, looking forward, we should be taking notes on how people in largely populated countries such as China, can benefit from such a system of owning very little, and renting everything.
Have you heard of WeChat?
If you have, you’ve probably been to China. If not, I recommend you check it out. I wrote about it in 2017, and remain fascinated by the culture around this technology. WeChat started as a simple chat application (like WhatsApp) that slowly became China’s Apple Pay, Venmo, Uber, Postmates, Skype, Reddit and Facebook all in one place.
Most people in China don’t have to leave WeChat throughout their day. Their social media is here, you can connect with friends via text or free calling, read your daily news, and even make cashless payments. It’s quite a favorable option because, one, it’s simple to use, and two, it’s used by every friend or local merchant of yours (not to mention competition is limited due to Facebook, Twitter, Instagram, and Google being blocked in China). Some Westerners might be fearful of the government accessing their data, but personally, I feel most of the apps I use already have access to our data anyways. We just happened to sign off on it.
Why is this important?
A large reason for the success of China’s sharing economy startups has to do with WeChat. Let’s start with the fact that 96% of citizens of large metropolitan cities in China are using the application. With a payment system that uses a simple QR code to transfer funds, companies can make transactions quick and painless, hold users accountable financially without asking for additional information, and target their market with little effort. You simply scan their account as they hold their phone up to your face at checkout, quietly pleading, “take my money!”
Meet Mobike
The hottest sharing economy in China right now are bike rentals, hands down. When walking around Beijing, Shanghai, Shenzhen (basically any large Chinese metropolitan), temptation lurks around every corner as rows of orange and silver, yellow, and blue bikes line the sidewalks. Around rush hour, herds of people returning from work pull out their phones to rent some wheels. One of the largest brands making this possible is Mobike, and they’re working on global scale starting in the UK right now. You may not have heard about these companies yet, but I assure you that they are coming very soon. With plans to scale to 100+ cities around the world in 2018 (already being in 30 Chinese hubs), your city may be next to launch one of these services.
How is this different than what we have abroad?
Accessibility, easy user-onboarding, and seamless payments. If your legs are giving out on you after a long day at work, and you want an affordable trip home, get a Mobike! It’s as simple as 1.) downloading the app, or connecting your WeChat, 2.) verifying your identification, and 3.) scanning a bike’s QR code to unlock it for the time you need it for. It’s super cheap. For example, during my two weeks in Shanghai, I spent $1.72 USD for 24.7 km! It’s a no-brainer if you’re moving around the city, or just want to feel like a kid again for a couple blocks. Once you’re done, 4.) just “click” the plastic lock, and 5.) leave it anywhere in the city. Yup, you can find these bikes anywhere, and you drop them off wherever you want…The beauty of dockless bike rentals. Much like these bikes, you can find a ton of other random things in China that you can rent for a few hours per day and drop off almost anywhere in the city. With economies of scale, consumers are able to rent things they don’t need to own at a very fair price, and shareconomy startups can capitalize on an entire country’s lifestyle choices.
There’s more than bikes in this “shareconomy”?
In the U.S., every single time you need to rent a car, request a ride-share, order McDonald’s via delivery service, borrow a bike, or pay for coffee — you need to download a new app. You’re used to inputting the same credit card, or personal information time and time again. It’s monotonous or tedious- you feel my pain, don’t you? Let’s be honest, nobody has time for that. The good news is… in Mainland China, you don’t really have to download every single app you want to use. A large majority of services are already stored in WeChat as MiniApps. They take a second to download, then you’re able to use a simple function like order food or other service through your account. It’s been a game-changer!
Once you add your financial institutions, and official identification, you’re ready to start ordering cheeseburgers, borrowing power banks, renting umbrellas, borrowing money, or hailing Didi (UBER China merger). Heck, now you can even rent cars by scanning a simple QR code in WeChat! Sure, you can still use the mobile apps (like myself), especially since these companies are trying to scale outside of China, but most locals just use MiniApps. In all, WeChat is vital to the adoption of sharing economy apps and services, making it undeniably easier to make an impulse purchase, or just say “fuck it- I’m going to ride a bike to work today”, or “man, I could really use a big mac”. From this culture, we’re seeing more and more shareconomy products every single day, some good, some failures, but what’s important is that this is a trend that will grow in China no matter what our opinion is.
It is possible. It is inevitable.
So, what’s next? Will this massive shareconomy make its way west? What will this trend of blockchain and decentralization add to this disruptive industry? How will it work without WeChat abroad?
The answer: I have no idea. That’s for time to tell.
What’s different between Mainland China, and international ecosystems is the fact that WeChat is really only fully-adopted, there. It’s making its way abroad, but really Mainland China benefits most from the app. Another difference is the cash heavy business of launching a Chinese shareconomy startup.There is ton of capital that needs to be invested since their business model is to be the owners/renters of product x or y, unlike the Uber’s, or Airbnb’s that decentralize the process, and have their communities populate the supply-side of that market. This is a trend that works for a lot of Chinese companies, and is seeming to be improved on. I have no tangible data on this, but from word of mouth sources, I’ve heard that umbrella sharing has even changed their business model to prevent their past shortcomings, and companies have seemingly maintained their business by keeping prices low for higher volume of transactions.
But, the lesson to learn here is how seamless Chinese shareconomy startups are. Some credit can be given to the fact that everybody seems to be using one application. From merchants, to consumers, everyone seems to be on it, and that helps. People can be held accountable, users don’t have to sign on to a thousand platforms, and payment only takes as long as it takes to pull up your QR code.
What I can imagine is that the costs for products and services will decrease over time when more items become available to rent, more competitors enter the space, and new ideas continue to saturate the Chinese market. Being in the blockchain space myself, I can even see China adding innovative blockchain technology in the form of tokens. The most important aspect to building a startup like this is having the supply side of the market to a product people want — and China has plenty of that. It’s just a matter of time before your entire lifestyle can be rented out in cities that just don’t have the time or space to own everything you use.
Signing out.
Matt Wright
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