China’s ‘sharing economy’ pulls in a flood of investment – The … – Washington Post

BEIJING Sometimes, when considering the orgy of spending that is Chinas start-up scene, its fun to imagine the pitch meetings.

Its like Uber, but for beds.

Bed sharing?

I know it sounds funny but

Take my cash.

That exact exchange did not happen. But it may not be far off. Chinese authorities recently shuttered a service that let people pay to sleep in windowless pods. There were questions about hygiene, according to local reports.

Perhaps there should be more questions. Flush with cash and buoyed by a billion-dollar boom in bike sharing, Chinas venture capitalists have gone sharing mad, funding companies that allow users to share items including washing machines, basketballs and umbrellas.

In some ways, the enthusiasm makes sense. Chinas vibrant but tightly regulated tech sector has been booming, with sharing leading the way. Chinese ride-hailing (and -sharing) giant Didi bought out Uber China. Airbnb is fighting Chinese rivals to win a piece of the home-share market.

The countrys top leaders know they must shift from manufacturing and resource extraction to a service-based economy powered, in part, by the Web.

To help things along, the state has thrown money into the start-up scene and nurtured homegrown tech companies, in part by keeping others out. (Sorry, Google.) It has also used its vast propaganda apparatus to cheerlead for local start-ups, waxing poetic about umbrella sharing, for example.

In April, a commentary in the Peoples Daily, a Communist Party-controlled newspaper, calleda Chinese umbrella sharing start-up a sign of progress in public service and a show of human care, releasing the warmth of the city. The company later made headlines when nearly all of its 300,000 umbrellas went missing.

At a 2016 tech conference, Robin Li, chief executive of the search engine Baidu, suggestedthat the sharing economy is in tune with Chinas socialist ethos. Both, he said, focus on distribution according to need.

The new, government-run Sharing Economy Research Centerestimates that the sector grew 103 percent in 2016, with deals close to $500 billion. The researchers predicted an annual growth rate of 40 percent in the years ahead. By 2020, the sharing economy will account for 10 percent of the countrys gross domestic product, the center said.

And yet, nobody seems sure what sharing economy means.

Gao Shen, a partner at Phoenix Tree Capital Partners, said there are two things going on.

Companies such as Didi and Tujia, a Chinese house-sharing firm, took existing resources cars, homes and made them available to others for a fee. Many of the new, self-described sharing start-ups do not useidle resources, he said.

If a company orders a bunch of new bikes or umbrellas and lets people rent them with their phone, is that sharing? Or is it renting with your phone?

A Chinese government newswire recently covered the launch of a shared washing machine service. Theres also a shared drying service. Anywhere else, they would be called laundromats. Or, perhaps, laundromats where you pay with your phone.

Along the same lines, is a phone-activated, two-person karaoke booth in a mall a karaoke share, or just a smaller and louder version of the status quo, plus phone?

Whats more, not everyone seems to understand the meaning of rent.

Like the umbrella company, Chinese bike-sharing start-ups have struggled to keep up with theft and vandalism, with one company, Wukong, reportedly losing 90 percent of its bikes in about six months.

In some cases, companies are launching products that seem like less convenient versions of things that already exist a fact that does not seem to stop the funding.

Andy Xie, an independent economist in Shanghai, said the rush of investment feels a lot like a bubble. In the past four, five years, every year there is something different to speculate on, he said.

Beijing, a city with free workout machines in public parks, now has shared gyms, a.k.a, outhouse-size workout pods activated by your phone. Investors are betting that people will pay for the chance to sweat and jiggle in a small glass box on the street.

A recent Peoples Daily write-up described the opening of the worlds first shared bookstore. Again, you can imagine the pitch.

Shared bookstore? ... That sounds a lot like a library.

Better, its a library where you pay with

Sold.

Yang Liu and Shirley Feng reported from Beijing.

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