Freedom, cross-border ethics, central government advantage: China gets serious about the sharing economy
Freedom, cross-border ethics, central government advantage: China gets serious about the sharing economy
The sharing economy is the only business model for the future, the sharing economy solves the woes of urbanization, its big data can build trust at home and across borders, it is the new civilization, a way to export ethics—and so far only China is in any position to exploit it. The Chinese government is already helping companies such as ofo to take its sharing platform global. These were some of the opinions expressed at a high-level meeting held on the sharing economy in Beijing last month.
Following on from the BRICS Forum in Xiamen, the China Chamber of International Commerce (CCOIC) held the BRICS Forum on the Sharing Economy where academics, officials and the founders of Didi, Ofo, Xiaozhu, Taxify, and Ola shared their views on the future of the shared economy and China’s role in it, in some cases via the Belt and Road Initiative that China has launched to drive development through revitalized Silk Road trade routes.
Xu Yu, deputy director for Information Development at the Cyberspace Administration of China, started the event with some statistics on how mass entrepreneurship will expand employment: The sharing economy is now worth RMB 345.2 billion ($52.33 billion), up 103% year on year. There are over 1,000 companies in the sector and has created 60 million jobs, a situation that is expected to increase further as Liang Hong, deputy director of International Trade & Economic Affairs at the Ministry of Commerce, reiterated the RMB 500 million e-commerce agreement announced by Xi Jinping in Xiamen (the Economic and Technical Cooperation Plan for BRICS Countries).
Sharing economy founders
Cheng Wei, founder and CEO of Didi, got off to an emotional start: “Witnessing this great change in history, really makes us feel proud, but also brings a great sense of humility”. He mentioned how three of the world’s top 10 unicorns are sharing economy companies before focussing on the impact of transport:“The automotive industry had defined our urban economy indeed our modern civilization for the past 100 years but we’ve reached the point where the physical urban space cannot allow us to continue that model of heavy asset, heavy resource model. Look at Tokyo. The city is surrounded by vehicles and parking lots”.
He believes AI and big data tech can help Chinese firms pursue a reversal of this trend. Cheng also believes that Didi’s global growth and use of the sharing economy as a way to find economic growth is a duty to Xi Jinping.
Zhang Peng, chief strategy officer for URwork, echoed the global duty by saying Chinese shared working spaces abroad will help Chinese companies go global by getting into local market as quickly as possible. Another angle on sharing economy as a global economic (and possibly diplomatic) push came from Dai Wei, founder and CEO of ofo: “In terms of overseas markets, the strongest support we’ve received is from Belt & Road countries… The Ministry of Foreign Affairs and China Council for the Promotion of International Trade helped us in local markets.” Though he acknowledged that ofo did not have any actual services in any Belt & Road Initiative countries, Russia, India and Brazil are all keen to cooperate.
“Other countries talk about change, but China is doing it,” said James Li, chief development officer at Didi. He said China is the representative country pursuing change in the sharing economy, making huge investments in internet infrastructure. “Even in areas without high-speed trains or highways, they still have internet infrastructure which allows development. The future is bright—we have all the conditions ready.” He believes Xi Jinping is committed to the sharing economy.
“The internet will become a light asset,” said Li, “We don’t need to purchase a car, we can have an invisible car on an internet platform… We will lead the reform and transformation of the car industry. In the future, if we’re not owning cars, we’ll need to design cars differently.” To sum up, Li said simply that, “the sharing economy is the new civilization”.
Representatives of sharing economy businesses from other BRICS countries agreed that for developing countries, China’s sharing economy is a far more relevant model than those originating in the US.
The academic angle
Perhaps the most farsighted and wide-ranging opinions ventured at the forum came from the academics invited to speak.
Yang Weiguo, Dean of the School of Labor and Human Resources at the Renmin University of China, spoke about the two identities we have and how they will be affected and possibly even merged by the sharing economy. We are all both workers and consumers. At the moment the sharing economy is seen as more beneficial to consumers, but this will change. “We know that there are limited resources in society so we need to optimize the allocation of resources and that is a definite trend. Labour providers need to find their own positions. This will change the model of employment in future. In the sharing economy era, everyone can join the production process.” Yang described as a “megatrend” the changes to society that will be brought about by the flexibility to supplement salaries by dipping into sharing economy gigs and the “freedom to choose what we like and choose what we’re capable of”.
“The sharing economy is the only business model in the future. The sharing economy lies in the essence of humanity,” said Yang. In the future, the sharing economy will have diverse business models which will also impact on our worker/consumer identities: “The sharing economy will change the relationship between workers and consumers. Some will try to blend work and life together. Maybe we’ll work less and have more vacation or maybe the two will merge into a whole different lifestyle.”
Yang sees the density of the availability of small jobs as the crux to the success of the sharing economy, but this comes down to the government as it will need to make changes to support a changing society as people continue to lose support from their workplaces:“The sharing economy is booming because of central government support promoting its penetration. The density is what we need to explore. Plus skills and individuals’ abilities—we need to be responsible for ourselves. Social structure will change as the sharing economy in essence is a market orientated situation. A group of people will be frustrated if there aren’t enough job opportunities so the government will have to think about welfare structure. Social insurance is currently covered by employers, but local governments might have to step in in the future”
These remarks were met with a round of applause from the audience. “We need to embrace the risk-based sharing economy,” concluded Yang.
Xue Zhaofeng, professor at the China Center for Economic Research and co-director of the Institute for Law and Economics at Peking University sees China’s strength as a world promoter of the sharing economy in the platforms it has built.
“The sharing economy enables the trend of urbanization and solves many of its major problems,” said Xue, “For example, Didi isn’t like a product that’s been developed in a lab and produced in a factory, then put onto the market. This is a product that needs to grow and be fed by data. It’s a living map.”
It’s the platform rather than the individual services that are the key to the sharing economy and offer an “important foundation for international cooperation”.
According to Xue, these platforms take a lot of setting up but then are easy to roll out. Chinese companies have already invested tens of billions of dollars in them, he said, and now they are ready to take them worldwide. The platforms have flourished in China due to the regulatory framework.
“Since 2012, the Chinese government has stuck to a basic policy that rules the platform, and the platform rules individuals. The government cannot manage each and every vehicle,” said Xue talking about car hailing, “Therefore we need to have a management system that works at different levels.
“Who should be in charge of it? Not the department of traffic or transport, not the association of taxis, not the passengers—nobody is in charge, but the successful experience we have in China is that someone is in control of the whole situation,” said Xue.
This overarching regulation is possible due to the nature of government in China:“China has a flexible management and regulation system, whereas some rigid management systems like those in Western society—parliamentary systems—even though politicians have the ambition to do the reform, they cannot implement it. Whereas here it is totally feasible and we can get the bigger picture of the internal and external situation.”
Xue later spoke on the protection of property offered by the sharing economy and the positive effect this will have for society. “Property is fully protected in the sharing economy, and because of the use of a platform and big data, the mismatch of information is also solved, leading to greater trust, meaning more people will share their property… When there isn’t sharing, such as the renting of houses, then society splits into two groups, those who don’t own houses and cars versus those who do, but the sharing economy reduces this divide,” said Xue who mentioned his own difficulties with house and car ownership in Beijing without a Beijing residence permit (户口, hukou).
Jiang Qiping, chief secretary general of the Chinese Academy of Social Sciences Institute of Information Technology also believes in the core importance of the platform: “So far the sharing economy has been about products, but in the future we will have to share the engine of production: capital. The platform will be shared as capital. In BRICS countries we can do this—in Europe we can’t.”
Also on the cross-border element of the sharing economy, Zhang Xiaofeng, founder of Internet Plus Committee of 100 (互联网＋百人会), believes the “sharing economy 2.0” will be more personalized, more humane and lead to convergence, blurred borders and countries learning from each other on issues such as regulation and even moral ethics:“China is the first country that has legalized online ride hailing services and this year stated guidelines for the sharing economy—the first large country to do so. We need to share experiences to avoid repeating each others’ mistakes… In terms of trust, trust can go beyond national borders, for example through Ofo, Didi—those companies focus on trust. The sharing economy introduces moral ethics into society and so we can think about how we connect moral ethics systems beyond our borders.”