Emerging markets lead sharing economy

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“China has become the leader of sharing economy and will be the center of future transportation reform,” Cheng Wei, CEO of China’s largest car-hailing service provider DiDi Chuxing, said Friday at the 2017 BRICS Forum on Sharing Economy held in Beijing by China Chamber of International Commerce.

Cheng Wei, CEO of Didi Chuxing, speaks at the forum on September 8, 2017 / Didi Photo

Sharing economy in emerging markets

Unlike other business models, which are usually led by developed countries, emerging economies, such as BRICS member states, witness faster development in sharing economy.

The Chinese market reported about 3.45 trillion yuan revenue in 2016, marking a 103 percent year-on-year growth.

The Chinese market boasts more than 1,000 sharing economy platforms, according to data from China’s State Information Center.

Experts and entrepreneurs attributed the fast growth to the imbalance of resources and population in emerging markets during urbanization.

The sharing economy can ease the imbalance of urbanization and agglomeration, Xue Zhaofeng, director of Institute of Law and Economics at Peking University said at the forum.

“What we need is not more cars but making better use of the cars we have now,” Pranay Jivrajka, founding partner of Ola, a ride-hailing service provider in India, said at the forum.

Vehicles are seen stuck in a traffic jam at an intersection after rains in Mumbai, India, August 29, 2017. /VCG Photo

India, the world's second most populous country, has a population of over 1 billion people but only with 20 million vehicles. Ola operates in more than 100 cities across the country, offering 16 different vehicles, including bike-taxis and rickshaws.

Brazil, the fastest developing market for ride-hailing only next to China and the US, has a slightly different situation.

With a population of 20 million, Sao Paulo has more than eight million vehicles. The excess car ownership has made daily transportation highly insufficient.

Meanwhile, insufficiency raises costs. The average spending on transportation in Brazil is about four times of that in Shanghai, Peter Fernandez, CEO of Brazil’s ride-hailing company 99, said at the forum.

Brazil's big cities are much more similar to those in China than the US in terms of car ownership penetration and average income, Fernandez said, noting working with BRICS countries, especially with China to help his company do a better job.

“This is the first time that the most advanced technology is used in China and Brazil and other BRICS countries before the US,” he said.

Expanding influence

The ride-hailing companies that attended the forum, including Ola, 99, Careem from the Middle East, Taxify in South Africa and Grab from Southeast Asia, all have received investment from Didi.

Didi is not the only Chinese sharing economy platform that is seeking overseas development.

Ofo, a bike-sharing service provider, started entering overseas markets last October and operates in nine countries other than China, including the US, UK, Kazakhstan and Singapore, Dai Wei, founder and CEO of Ofo said at the forum, noting China’s Belt and Road Initiative has strongly backed the company in overseas expansion.

An ofo bike on the street in Singapore on September 6, 2017/ VCG Photo

With the expansion of the sharing economy, the influence has also escalated.

The sharing economy offered 60 million jobs in China in 2016, compared with 50 million in 2015, official data showed.

However, in addition to more job choices being offered, the expanding sharing economy also required the government to adjust the social security system accordingly, Yang Weiguo, Dean of School of Labor and Human Resources, Renmin University of China, said at the forum.

There is an urgent need to explore building a new social security system based on individual business transactions, instead of your employer, he said, noting it is essential to protect workers, especially the vulnerable when the economic structure is changing.