Could a Shared Economy Work in China?

Monday, August 6, 2012 18:54
Posted in category Going to Market

In the recent Fastcompany article A Hitch In The Sharing Economy: Why Consumers Don’t Take Care Of Shared Objects, the author looks at some of the key findings from a recent study of Zipcar users. A business model that has received a lot of attention, and funding, over the last few years, Zip Car is one of the best known firms for capitalizing on the shared asset model whereby they estimate each of their Zipcars will remove 20 car purchases.

But as the article suggests, the model has a few issues related to the way that clients/ users treat the assets:

But a new study warns that participants may not always take the best care of their loaned objects because they don’t feel a psychological sense of ownership.[…] the study authors found that Zipcar members don’t feel a sense of ownership of their rented vehicles. One member named Mike described in the study how he feels about Zipcars: “I’ll double park a Zipcar real quick if I’m just running into Starbuck’s or something. Which I wouldn’t want to do with my car. Or, I’ll parallel a Zipcar in a tighter spot than I would with mine because it’s not mine. I’m just not worried about it. When I’m driving a Zipcar, it’s like any other service that you do. It’s convenient. Like if I’m in a restaurant, I don’t think I own the kitchen. If I’m in a Zipcar, I don’t feel like I own the car, I’m just using the service.”

The money quote being:

Zipcar member Chuck described the feeling: “You can just beat the hell out of it; it’s not your car. Like, I don’t have to think about changing the oil; I don’t have to care whether or not the tires are flat. … And you know some magic car fairy will come and fix whatever is not right with it later.”

“Findings” which led me to wonder a couple basic questions (1) Could a shared economy work in China? (2) how would the systems in China need to recalibrate for the Chinese market?

In answering the questions, I find myself first Thinking about the commons, and how the commons are currently managed. Thinking in this way, then it is pretty clear to me that there would be challenges, given the fact me 12 years of observing how the average Chinese values existing space and objects that are common. One of the most interesting articles of late being the one explaining why you cannot find toilet paper in many of chinas bathrooms

Which then leads to a question of controls, and how a firm who were looking at this market would have to manage the various abuses that could occur. On the one hand, systems would need to prevent abuses, while at the same time having a system in place that could effectively prove who the abuser was and then enforce the policy against that user. Both difficult tasks for cops armed with traffic cameras. On the other hand, the system would need to be flexible enough to allow for a certain amount of abuse, and ist effectively so.

Which leads to my last point, which is that while I certainly see markets that exist for sharing, the system would have higher embedded costs here as the value proportion for sharing would be very different. To reduce these costs, one area that would be particularly effective would be to develop strong communities that promoted responsible use through peer pressure. The closer the peer is to their natural community, the better.

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One Response to “Could a Shared Economy Work in China?”

  1. Will Chinese Pay Extra to Firms With Purpose? | All Roads Lead to China - Business News, Analysis, and Insights from China says:

    August 17th, 2012 at 8:24 am

    […] off my previous posts, Could a Shared Economy Work in China? and Do Chinese Consumers Care? Really?, a recent Edelman goodpurpose study, which surveyed 500 […]