Communism and capitalism merge in China – the sharing economy

 

What do Mobikes, umbrellas, power phone banks  and basketballs have in common – they are being rented out in China as the sharing economy is gaining traction in China. 

Is China going back to its roots? “That’s the essence of communism: communal sharing.” Is the sharing economy a natural merger of capitalism, communism and socialism? 

Mr. Xu set up Zhulegeqiu, which in Chinese is a pun that roughly means “Rent a Ball.” It lets users rent basketballs for 1 rm (15 c) from custom-designed automated lockers at basketball courts around the country. To rent a ball, users scan a code on the locker with their smartphone camera, unlocking a compartment holding a basketball.

Mr. Shen, an entrepreneur, has raised capital for a shared umbrella service called Molisan, which means  “Magic Umbrella,” charging 1rm (15 cents) to rent an umbrella for 12 hours from their kiosks at stations.

Shanghai-based Duola, rents concrete mixers, mixer drivers and construction sites, are more niche and have analogues with similar rental businesses elsewhere. 

Portable phone-charging business, has enthused entrepreneurs and VCs – with plans to put portable-battery kiosks in malls and elsewhere.  Laidian, Xiaodian, and Jiedian — raised more than $127 million in financing, according to itjuzi.com, a website that tracks investment in Chinese technology companies.

How do these companies recover unreturned rentals – incessant phone calls! 

The Sharing enablers – how payments are made – Fintech 

Payment is made by Sesame Credit, the social credit scoring system developed by China’s Ant Financial, an affiliate of e-commerce giant Alibaba Group, that enables micro payments 

China’s cutting-edge, smartphone-based mobile payment systems also make sharing a snap. Run by Chinese internet giants like Tencent Holdings and an affiliate of Alibaba Group, the payment systems integrate seamlessly with a user’s bank account and allow even tiny transactions with simple taps and camera snaps.

Where the money comes from

Zhulegeqiu received around $1.4 million in venture investment from Modern Capital, a Shanghai-based venture capital firm.

Venture capital firms in China invested $31 billion in 2016, up nearly one-fifth from the previous year, according to a recent KPMG report. Much of that has gone to sharing companies, as some big-money winners and a thriving start-up scene draw investors from home and abroad.

“We’re seeing a lot of money bouncing around,” said Zhou Wei, chief executive of XNode, a start-up accelerator and co-working space in Shanghai, “and foolish investments being made.”

The market for sharing in China

China has conditions ripe for sharing

• A huge population, 
• dense cities 
• a sizable group of people who cannot afford to buy.

The Chinese government sees promise in sharing. It estimates sharing last year accounted for $500 billion in transactions, and projected it would account for 10 percent of China’s economic output by 2020.

Posted on May 30, 2017

4 responses to “Communism and capitalism merge in China – the sharing economy”

1. Ivan says:

   May 30, 2017 at 10:06 pm

   The big prize for these companies is not a slice of transaction revenues but data. Goods rented out many times provide troves of statistics on usage habits. Data can also be used for credit scoring systems: fail repeatedly to return an umbrella, and your credit score will go down.

   Reply
2. Ivan says:

   May 30, 2017 at 10:14 pm

   Does the sharing economy phenomena illustrate a paradigm shift? How will on-demand access to goods change the way we think about ownership? How does access to everything affect the way we perceive our right to ownership? The “sharing economy” , providing on-demand goods and services — providing effective use and commercialisation of the untapped value of assets – is a new way of organizing economic activity different from the traditional, corporate-centric model.

   Reply
3. Ivan says:

   May 30, 2017 at 10:21 pm

   PricewaterhouseCoopers predicts five sharing sectors – car sharing, travel, finance, staffing, and music and video streaming – have the potential to increase global revenue to $335 billion by 2025 from $15 billion today.

   Reply
4. Ivan says:

   May 30, 2017 at 10:22 pm

   At least 1.69 billion yuan ($247 million) in mostly series-A, or early stage, funding was invested in April-May in over two dozen start-ups offering sharing services, according to Reuters calculations based on data from Chinese data firm IT Juzi

   Reply