Sharing Economy in China

 •  Filed under China, digital markets

Recent news items related to the "on-demand" digital platforms in China


WSJ: China’s Didi Kuaidi Gets License to Ride in Shanghai

Sun Jianping, director of the Shanghai Municipal Transportation Commission, said he had briefed Uber on the requirements earlier this year and was prepared to consider its application. “We are open to all car hailing apps as long as they meet the criteria and comply with Chinese laws and regulations,” he said.

Both companies are racing to emerge from a Chinese legal limbo that speaks to the rapid expansion by both Uber and Didi Kuaidi. It marks the latest example of untrammeled growth in China’s Internet—in everything ranging from e-commerce to financial transaction to online-to-offline services like restaurant delivery—that has seen entire industries zoom ahead of Chinese regulators.

Didi Kuaidi and Uber have invested heavily in private-car-hailing services, which an increasing number of Chinese use via smartphone apps. Didi Kuaidi has just raised $3 billion, and Uber has earmarked more than $1 billion for the Chinese market.

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As of the end of June, Didi Kuaidi controlled more than 80% of the Chinese private-car-hailing market by ride volume, according to market research firm Analysys International, compared to 15% for Uber. But Uber has declared China its most important overseas market and has set out a plan to expand to 100 Chinese cities from about one-fifth of that in the next year.

Shanghai is traditionally a test-bed for China’s new economic policies before they are rolled out nationally. Since June the Shanghai government has allowed the city’s taxi drivers to use Didi Kuaidi’s app, the company’s core business before it went head-to-head with Uber in private rides.

Private taxis are technically illegal in many places in China, and some local governments have moved to restrict such services. Beijing city authorities blamed Didi Kuaidi and Uber in July for increasing traffic congestion and said the companies were suspected of running illegal taxi services and evading taxes, according to China’s official Xinhua News Agency.

FT: Didi Kuaidi secures Shanghai licence and takes lead in legal race

Analysts said the decision to issue a licence shows the close relationship between Didi, which is part-owned by Chinese internet behemoths Alibaba and Tencent, and Chinese authorities, who worked together with the company since the pilot project to come up with the new regulations was launched in May.

In an interview in July, Steven Wang, Didi’s head of strategy, described the process of writing the regulation as “collaborative”.

SCMP: Didi Kuaidi grabs China's first internet car-booking licence from Shanghai while rival Uber sets up local company in city's FTZ

In August the start-up, which was created in February via a merger of China's top two rival car-hailing apps and is now valued at around US$16 billion, announced plans to invest in Indian taxi service provider Ola and Southeast Asia's Grabtaxi.

SCMP: Targeting Uber and Didi Kuaidi, Beijing launches official car-hailing app

SCMP: Here’s what analysts are saying about Uber’s plan to push into China

The Ministry of Transport will require online car-booking companies such as Uber and its home-grown competitor Didi Kuaidi to be licensed and have their prices set by the government. “Internet-based car-booking operators should not be in a dominant position in any place they offer services, and must not hinder fair market competition,” the draft regulations said.

The new laws will be designed to protect traditional taxi services, under threat of million-dollar fines. Yang said the biggest sticking point for private car owners working for Uber would be the requirement for them to register their cars as commercial vehicles. “If you register it as a commercial vehicle it will be scrapped after eight years,” she said. “I think most private car owners would not be willing to sacrifice their vehicles.”

Xinhua Insight: Sharing economy shaking up business in China

Executives of ride-sharing services Uber China, Didi, and Kuaidi have been summoned by authorities many times in the past few months to discuss the legality of their operations without taxi licenses.

Regulation of lodging-sharing services in China is even more opaque. Companies like Xiaozhu are operating in a gray area in which there are no rules specifying how hosts pay taxes on what they earn -- so they simply don't pay.

SCMP: Airbnb here to stay in Hong Kong as the sharing economy takes flight

A survey earlier this year found nearly a third of internet users in Hong Kong dipped into sharing services, from car-hailing apps to crowdfunding platforms, up to eight times a year.

But, like Airbnb, such services often exist in a legal grey area. Hong Kong this month became the latest jurisdiction to crack down on car-hire app Uber, amid an outcry from the taxi industry.

NYT: Airbnb Seeks to Expand in China With Local Help

Xinhua Insight: Sharing economy shaking up business in China

Knowledge can be shared too. Zaih.com, launched this year, tries to connect people with expertise -- whether in art, science or lifestyle -- with people seeking advice. Those in need of professional help can click a button, schedule a face-to-face meeting with experts, and pay them a fee of about 50 U.S. dollars for a consultation. ... According to research agency 01caijing, P2P in China expanded 172 percent to 300 billion yuan (47 billion U.S. dollars) in 2014, with more than 1,500 market players similar to Lending Club in the United States or Zopa in the United Kingdom.

Le Yucheng, ambassador of the People’s Republic of China to India: Chinese economy: sprint to marathon

The Internet economy and sharing economy have made Chinese people’s lives more convenient while boosting consumption. For example, ordinary people can make an appointment online with a chef on-site service and a chef comes to your house with a full set of kitchen utensils and ingredients.