China's sharing economy facing more market competition, government support
BEIJING — China's sharing economy is facing mixed prospects for growth: market competition is increasing and weighing on players, while the government is trying to offer more support to create an enabling environment.
Bicycle-sharing, representative of China's popular sharing economy, has been making headlines in the past week. Wukongbike, a bicycle-sharing app developed by a Chongqing-based company, announced it will stop service on June 13, citing rising cost burdens due to lost bikes. It is the first bicycle-sharing market player to be pressured out of the sector.
The two bicycle-sharing giants ofo and Mobike also face many uncertainties in the future despite having deep pockets, as their respective major investors Monday debated online over which firm will take the lead.
About 30 bike-sharing brands have sprung up in China, placing millions of bicycles on streets around the country and attracting over 100 million users.
"The bicycle-sharing sector is now undergoing a reshuffle and weak players might be forced out of the market by the end of this year," according to Wang Chenxi, analyst with Analysys, a domestic data analysis provider.
While the market can be cold-hearted, the good news is that the central government has decided to nurture the sharing economy's sustainable growth.
The State Council, China's cabinet, Wednesday announced its decision to facilitate the healthy development of the sharing economy, amid its efforts to boost mass innovation and entrepreneurship.
The sector will enjoy easier access, greater policy transparency, and better protection of legitimate rights of platform companies, resources providers, and consumers, according to the statement released after the State Council executive meeting chaired by Premier Li Keqiang.
These moves will help mass innovation and entrepreneurship thrive, create more jobs and provide more diverse and efficient services at a lower cost, the statement noted.
"We should give credit to the sharing economy as a reinvigorating force in China's economic growth," Li said.
Entrepreneurs are encouraged to explore the sharing economy, while the authorities aim to adjust administrative approval and business registration procedures in light of new business models.
Authorities are tasked with improving public services in terms of data sharing, government service procurement, urban planning and resources management innovation, the statement said.
Financial institutions are encouraged to provide innovative services and products tailored to the demands of companies in the sector while cutting edge companies are encouraged to go global, establish their presence and build their brand name.
Sharing, whether bicycles, automobiles, property or any other asset, has become popular in China, as people seek to make their lives easier and save resources.
The trading volume of China's sharing economy more than doubled year-on-year to 3.45 trillion yuan ($505 billion) last year, according to a report released by the State Information Center.
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 center predicted.
The rapid development of the sharing economy also bring challenges for urban management. For example, haphazardly parked shared bikes has led to congested city sidewalks.
The Ministry of Transport (MOT) issued draft rules last month requiring real-name registration for the bike-sharing service while urging local governments to better manage bike sharing and arrange for orderly parking.
"The regulation of sharing economy should be tolerant while prudent, as there is still much yet to be learnt about new business models. We should avoid simply applying traditional methodology on sharing economy," Li said.
