CKGSB Knowledge - China Business and Economy

Sharing Economy on Borrowed Time?

The sharing economy exploded in China this year, with companies for bikes, umbrellas, toys and more all taking part in the hype. But with the concept reaching fever pitch, sharing could be in for a reality check

In the 1960s and 1970s, the most popular wedding gift in China was a bicycle. By the end of the 1980s, there were 500 million bikes in China and Beijing had gained the title of “Bicycle Kingdom,” with freeway-sized bike lanes accommodating millions of commuters.

Then things began to change. Bike lanes shrank as car lanes grew, bus routes and subway systems underwent massive expansion, taxi cabs became affordable and electric scooters pervasive. The humble bicycle never quite disappeared, but society moved on to bigger things.

But in 2016, a stroke of genius helped the bike stage an unlikely comeback as part of the “sharing economy.” Bikes can now be rented via an app and you can park them anywhere on the street.

Such is the ubiquity, particularly of the two leading companies—Mobike (10 million orange-and-silver bikes) and Ofo (20 million canary-yellow bikes)—that the bicycle can be thought of as the two-wheeled flagship of sharing, spreading the gospel of the business model. In March, Shanghai was the most shared bike-heavy city in China, with 450,000 on the streets.

Since shared bikes hit the streets, the phrase “sharing economy” has gone from buzzword to boom market. But defining the sharing economy can be confusing. Uber and Didi, for example, are often referred to as “sharing economy” companies, but many disagree. The term usually covers businesses that share underutilized assets, like cars or spare rooms—but China’s proliferation of the scheme has

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