Sharing economy is booming in China, but can it last? The answer is yes, according to economists, and growth will be fast, but not without challenges.
THE SHARING MARKET
The market value of sharing economy will reach 4.5 trillion yuan (about 680 billion U.S. dollars) in 2017, compared with 3.45 trillion last year, according to the State Information Center (SIC).
The sharing economy is expected to maintain annual growth of about 40 percent over the next few years, the SIC forecast.
The business model was originated from and flourished in the consumption sector, with companies such as Mobike and ofo in bike sharing and Airbnb in home sharing.
It is now also accepted by manufacturing and artificial intelligence (AI) enterprises.
By establishing a sharing platform that connects global innovation with China-made products, IngDan has now brought together over 16,000 programs of intelligent hardware, 14,000 suppliers, and 16 million hardware buyers.
“The sharing economy is providing new growth in the manufacturing industry, while sharing of production materials will become more important,” said Ding Minglei, analyst with the Chinese Academy of Science and Technology for Development.
Shenyang Machine Tool (Group) developed an “i5” smart operating system which serves as a sharing platform for raw materials.
“The i5 is actually five ‘i,’ standing for five English words, industry, information, Internet, intelligent and integrate,” said Guan Xiyou, chairman of the Group.
Thanks to the core technology with multiple patents, i5 smart machine tools have received over 20,000 orders. Over 50 agreements have been signed to build smart factories nationwide.
Knowledge sharing is also on the up.
“Paying for superior online knowledge and content has become popular, replacing the previous mode of providing knowledge online for free,” said Zhou Yuan, founder and CEO of Zhihu, an online community sharing knowledge.
A series of credit services, including deposit exemption service, fueled the sharing economy, with users of sharing products increased by 12.7 percent month on month from January 2016 to April 2017, SIC data showed.
THE REGULATORY CHALLENGE
Despite the good news, the sharing economy faces blind expansion, with regulators struggling to forestall risks and clear the market.
Large and medium sized cities including Beijing and Shanghai have made regulations since August, stopping bike-sharing companies from adding new bikes.
“The industry has seen excessive production and delivery of bikes, causing road safety problems,” said Tang Yunyi, a researcher with Shanghai Academy of Social Sciences.
Tempered by competition and regulation, a couple of bike-sharing companies have closed with nearly 1 billion yuan of deposit missing.
A research report by the Tencent Research Institute showed that 15 companies providing transportation services, such as on-demand taxi service, have closed during 2016-2017.
To promote the sharing economy, China issued guidelines in July. The government will encourage innovation in sharing while regulating the sector in a tolerant and prudent manner, according to the National Development and Reform Commission and other seven government departments.
The country will open more government and public data to the market to improve efficiency. Specific employment and taxation policies would be adopted to assure the sharing economy’s growth.