Winton Dong

dht0620@126.com

BESIDES four famous ancient inventions, China is now proud of four new inventions, namely high-speed railway, electronic payment, bike sharing and online shopping.

Among the four new inventions, three have something to do with the sharing economy, which is characterized by an emerging business model that uses new technologies to create platforms and help people share what they have. Sharing is such a huge market in China and one of the most frequently used terms in the country in recent years. Customers can conveniently access many services in big cities by simply scanning a QR code via their mobile phones or logging on to the apps or sites on the WeChat messaging platform.

However, sharing is surely not a panacea for solving the problems of the Chinese economy. With Mobike and ofo as examples, we can learn many lessons from the ups and downs of these two biggest bike-sharing companies in China.

In April 2018, China’s online-to-offline catering company Meituan-Dianping acquired Mobike for US$2.7 billion, 65 percent of which was paid in cash while 35 percent was paid for by Meituan’s stakes. According to media reports, Mobike’s debt before the acquisition surpassed US$1 billion, including 6 billion yuan (US$887 million) in users’ deposits that had been spent and 1 billion yuan of outstanding debts to various suppliers.

The difficulties of the other company, ofo, are even more serious. The company is now struggling in financial mire. Users of its bike-sharing service were initially asked to pay 99 yuan in deposit before they could use the bikes. The deposit was later increased to 199 yuan. With users worried about its possible bankruptcy, the company has so far received about 13 million online applications for deposit refunds, which means it needs to return at least 1.3 billion yuan to its customers. The refunding process is slow and many angry users have been queuing up at ofo’s headquarters in Beijing. “As we return deposits, pay off debts to suppliers and maintain normal operation, we have to turn every 1 yuan into 3 yuan,” said Dai Wei, CEO of the company.

Bike sharing is just one of the sectors that have emerged in recent years that are part of China’s sharing economy boom. At present, peer-to-peer sharing of idle resources only accounts for a very small part of the Chinese sharing economy. More importantly, the sharing model enabled by new technologies helps to transform all traditional businesses and make them operate in a more innovative and efficient way. However, after the quick development of the sharing economy in the past years, many companies like ofo are now facing challenges such as safety concerns and winning customers’ trust.

During the past years, investors all over the world have been enthusiastic to embrace the new sharing economic model in China. Fueled by several rounds of venture capital investment, Chinese sharing companies are expanding rapidly at home and abroad, leaving less or even no room for refined management and maintenance.

Moreover, many sharing companies have been expanding randomly at the expense of public interest. With the bike-sharing sector as an example, numerous bikes owned by Mobike and ofo once occupied all the pedestrian roads and other public places in Chinese cities, but now many piled-up, shabby and out-of-use bikes have become an eyesore in these cities.

To stop financial loopholes and enhance the security of funds, legislative bodies in China should also stipulate more rules and regulations, requiring those sharing platforms to put deposits they have collected from users into designated bank accounts and refund the money in time upon the request of users.

Slower and steadier speed signals a more sustainable development. The sharing economy in China has entered a new stage where quality matters more than speed. Companies should also shift their focus from rapid market expansion to enhancing service standards and customer experience. Only by implementing effective measures to protect consumer interests and taking on their social responsibilities can the sharing economy model play a more important role in transforming and innovating traditional industries in China.

(The author is the editor-in-chief of the Shenzhen Daily with a Ph.D. from the Journalism and Communication School of Wuhan University.)