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Dialogue
How Far Can the Sharing Economy Go?
While more and more businesses are posing themselves as part of the 'sharing economy', their operating models are being increasinlgy questioned
 NO. 21 MAY 25, 2017

(LI SHIGONG)

Shared bicycles are nowadays widely used in China's cities, but bicycles are only a small part of the burgeoning "sharing economy" sweeping the nation. Business models involving shared basketballs, umbrellas and power packs are mushrooming.

The question now is: Can these so-called sharing businesses really be categorized as belonging to the sharing economy? Some argue that the sharing economy means that people share with others their idle resources, which would otherwise lie unused. For example, through online car-pooling platforms, private car owners can make some money by sharing their cars with those who need a ride, particularly when regular taxis become scarce during peak travel hours.

However, most businesses which claim to operate under the sharing economy model make available not idle resources already existing, but products purchased in large numbers specifically to be shared by the general public. There is concern about how far these so-called sharing economy businesses can go. Others argue that whether or not they live up to the concept is not so important and the market will ultimately decide whether these services can survive.

Risks

Ding Shenyi (Legal Daily): The so-called shared products or services are deviating from the sharing economy concept. By sharing economy we mean things like online car-pooling services. People share seats with others in their private cars which would otherwise be left vacant. However, things like shared bicycles are not idle resources. These bicycles are manufactured with fresh resources. They are not provided by people who already possess so many bicycles that they may as well share them with others. To use the shared bicycles, you first have to put down a deposit. This model looks more like an example of the rental economy than the sharing economy.

Following in the footsteps of shared bicycles, so-called shared umbrellas, power packs and basketballs as well as other items have appeared, but none of them can strictly be defined as exemplifying the sharing economy concept. Some of these services can be enjoyed without paying a deposit if the user's credit score, evaluated by Sesame Credit, a credit-rating service affiliated to e-commerce giant Alibaba, exceeds a certain threshold. However, only a very small fraction of users can attain that level, so a vast majority of users still have to pay deposits.

What the service providers focus on is users' deposits. What they are engaged in is not the sharing economy, but a kind of financial business. Although these businesses characteristically belong to the rental economy, they still seek favorable treatment from the government under policies designated to support the genuine sharing economy. Recently, relevant authorities have been trying to regulate the operation of shared bicycles, which may be a sign that abuse of the sharing economy concept will not be tolerated.

We have noticed that as the sharing economy concept shows up everywhere, the need to download various apps and put down numerous deposits is actually complicating life. The abuse of the concept may damage the genuine sharing economy. The distortion, if not reversed, will only move further and further away from the true sharing economy.

Wang Qing (Legal Evening News): It's difficult to know whether the multiple types of sharing economy businesses will succeed in the long run. It's easy to see that many businesses that claim to exemplify the sharing economy concept do not do so at all. They are just instances of the traditional rental model, under the guise of the sharing economy. For example, some sports venues rent out basketballs in the name of the sharing economy. But in fact, notwithstanding the quick response (QR) codes printed on the balls to facilitate payment, this is just a typical rental business. The only difference is that payment would previously be handed to a person, whereas now, users can pay via their mobile device.

While some things are suitable for public sharing, some are not. For example, the Sesame Credit scoring system supports "clothes sharing." But clothes are very personal things. How many people will accept this kind of sharing?

Risks are unavoidable in market competition, so businesses that invest in sharing economy start-ups—be they spurious or genuine—must be prepared for whatever results they encounter.

Although they have provided consumers with more choices, the security of users' deposits is a worrying issue. Currently, any business can require users to pay a deposit by means of QR codes and mobile payment platforms. Sooner or later then, we may expect to see some companies failing to return such deposits. In the absence of rules to regulate the handling of these deposits, more and more related complaints and disputes are expected to arise.

Moreover, as personal cellphones are no longer simple communications tools but databases of personal information, the risks go beyond the issue of deposit security. QR codes are appearing in more and more places. If any business engaged in the sharing economy has malevolent intentions or has its servers hacked, the consequences will be very serious.

As the sharing economy booms, it's time for relevant watchdogs to establish a business credibility information platform and also a blacklist, so that deceitful business people are excluded from the sharing economy. If enterprises want to operate in the sharing economy, they must try to protect users' information and financial interests.

Tolerance needed

Hao Kun (guancha.gmw.cn): Many people see the sharing economy as an opportunity to start up their own business. On the one hand, the burgeoning of this sector reflects investors' and entrepreneurs' enthusiasm for this new economic model. On the other hand, it implies a shortage of good new economic models.

Whether or not sharing economy businesses can develop depends on the size of the user base and the popularity of their services. Not everything can be shared on such a scale or corner such a large market as bicycles. So, replicating the bicycle-sharing model with other items for public sharing involves a huge waste of social and material resources. Some commentators have pointed out that these start-ups are interested not in the sharing economy model, but in monopolizing deposits and payment channels. Risks stemming from the way the so-called sharing economy currently operates should never be underestimated. As new businesses pile into the sector, their management capabilities are very much open to question.

Claims by businesses that they belong to the sharing economy are increasingly being doubted. Generally speaking, the sharing economy model features temporary public sharing of idle things. Today, however, under the guise of the sharing economy concept, companies are leveraging investors' capital to purchase products in large numbers which they rent to users, who must put down deposits. This model is simply a new instance of the traditional rental business, except the billing process is handled online. Therefore, both entrepreneurs and the public must keep a clear mind about it. At the seemingly prosperous current stage, the risk of financial loss is significant.

Of course, any new economic model may experience stages of struggle, widespread adoption, exuberant inflation and bubble bursting, and the sharing economy is no exception. As for possible problems, or even bubbles, society should demonstrate a certain degree of tolerance. The public should not expect the authorities to interfere with this emerging economic model. The creation of too large a bubble, however, poses risks not only to investors, but also to entrepreneurs. Thus, they should be alert to the possibility that the bubble of the much-hyped sharing economy will burst, so that the image of the genuine sharing economy will not be tarnished.

Wang Junrong (opinion.southcn.com): It's all right that businesses want to make money from the sharing economy. Whatever they do, their business models will have to undergo the test of the market. If they cannot endure the examination, they will disappear. But if the operations manage to keep going, they should not be criticized for not belonging to the true sharing economy.

It's true that some business people disguise their activities as examples of the sharing economy, whereas this is actually not the case, since they do not involve the sharing of pre-existing but idle resources. However, as long as there are consumers who wish to use these services or products, they have a reason to continue. And, while some businesses do not in fact belong to the genuine sharing economy, they provide services that bring great convenience to daily life. This may be the reason why so-called sharing economy business operations are now thriving. In any case, they are still in a preliminary stage, and only time will tell whether they can survive. Meanwhile, we should not interfere with them, either in word or deed.

Copyedited by Chris Surtees

Comments to yanwei@bjreview.com

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