China’s not known for its propensity to share, but lately, it has shown its potential to really adapt into a sharing economy. Popular services such as Airbnb, which allows homeowners to rent short-term to vacationers, and Lyft, which allows drivers to earn money taxi-ing passengers, have grown popular. Can similar services also flourish in China?
Although the notion of people purchasing services directly to other people – rather than hotels and taxi companies, for example – can be practical and interesting, it really is more of a foreign concept in China. Cultural barriers make it harder for a sharing economy to become the norm (though they don’t make it impossible). For one thing, relationships are not easily built with strangers, and trust is traditionally given freely only to those who are personally connected, such as friends or family. There is a stronger general mistrust that gets in the way when homeowners are expected to rent out their places to strangers. As well, with a burgeoning middle and upper class eager to show off their wealth, rideshares are not appealing. Personal cars still denote status despite, or perhaps, because of, the expenses of buying, insuring, and maintaining a vehicle that is difficult to park in many major, congested cities. On-demand services such as Lyft or even the more luxuriously-branded Uber are not as relevant in areas that have efficient taxi systems in place.
Yet some changing factors show China’s potential to have a sharing economy. The younger population – which has grown up with technology and is likely more partial to online interactions – can influence a change in the market. The prevalence of social media and globalization may also be playing a part in influencing people to be more open-minded and trusting in sharing economy systems.
So how is China’s sharing economy doing? Rideshares in China can be found on sites such as 58.com, but are targeted more for long distance trips. Social media applications such as WeChat have made taxis, which are generally prevalent enough in populated areas, even more available with taxi hailing features. It is unlikely a rideshare service such as Lyft will dominate the sector in China, where taxis are convenient and cheap enough to not hitch a ride from a stranger. However, peer-to-peer car rental may succeed. Factors make owning a car more expensive, including the government making license plates pricey, and millions of Chinese are licensed but vehicle-less while wealthier others have multiple cars. Services such as Atzuche, which allows people to rent out their luxury vehicles, may grow significantly over the years. Vacation rental services like Airbnb though, are already more popular now. Three of China’s brands dominating the industry right now are Tujia, Xiaozhu, and Mayi.
Tujia offers more middle and upper end rentals that are cozy, often unique alternatives to hotels, much like Airbnb. Tujia has over 80 thousand properties listed, mostly in China but with some overseas. However, Tujia is also working in a different market. In China, there are many wealthier citizens who are able to purchase homes as investments – but leave them empty. Tujia saw this niche market of high-end apartments and decided to capitalize on the construction of housing in China that have no residents. It offers an incentive for homeowners to purchase new homes by showing that there is a return on investment through Tujia rentals. Meanwhile, developers who partner with Tujia benefit by selling properties faster and at a higher price since consumers are reassured about their purchases’ return. The brand also provides separate services such as housekeeping for those that want it, basically managing properties in owners’ absences.
Though Tujia has cheap rentals listed, an abundance of affordable hotels and hostels make Tujia more of a go-to for citizens with money to spare, providing more luxurious stays. Meanwhile, Mayi and Xiaozhu are competitors in the market for cheaper options. These sites, as well as other local sites for short-term rentals, have options of properties for under 50RMB, including places that are dormitory style. Potential for further growth is there, as Xiaozhu just gained $15 million USD from investment.
With the sharing economy trend rapidly growing around the world, China is getting there with services ranging from homeshares to rideshares to clothes swapping. The increasing costs of consumption are catching up, making the sharing economy a necessary alternative for some. Though the sharing economy is not yet fully accepted, and may never be as popular as it is in some countries, it is still steadily blossoming in China.