Sharing economy, China versus Europe

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Around the globe, many have been fascinated with the idea of sharing economy following the meteoric rise of Uber and Airbnb. It refers to the third party online service providers that help businesses and individuals turn excess supply into revenue. There are essentially 4 key sectors of sharing economy:

P2P transportation: sharing a ride, car, bike, or parking space with others

P2P accommodation:households sharing access to unused space in their home or renting out a holiday home to travellers

Collaborative finance: such as P2P lending and crowd funding

On-demand professional services: basically the freelancer marketplace

According to PWC’s estimation, in terms of total revenue, P2P transportation is the biggest sector of Europe’s sharing economy, turning over Euro 1.65 billion in 2015. If ranked by total transaction value, P2P accommodation is the top sector, with a total of Euro 15 billion as Europe now accounts for more than half of the Airbnb’s global property listings. The UK and France have led the momentum, with over 50 sharing economy startups founded in each of the two countries. Though the tide of sharing economy has been rising high these days, it has stirred heated controversy and debate in tandem. Uber and Airbnb are currently facing mounting regulatory roadblocks and legal crackdown in Europe.

In China, P2P lending and crowd funding seem to gain an upper-hand, though regulatory guidelines remain to be a thorny issue. P2P transportation is also constantly in the limelight as recently Didi, a China twisted version of Uber, backed by local giants like Alibaba and Tencent, eventually acquired the China operation of the American Uber. Nevertheless, many Chinese consumers began to question the monopoly of Didi in taxi&car hailing market due to the growing fare charges imposed upon passengers after this mega M&A deal. P2P accommodation has undergone a bumpy journey as well. An exact and the earliest copycat of Airbnb died in July 2013 after having squandered away over USD20 million. Of course, several apostles of Airbnb in China have managed to survive today, but they all have to tweak their business model and service offers in order to meet the mentality and behaviour of Chinese users.

On-demand professional service is the sector which in overall receives less public attention. After all freelancer platform is not a new idea. According to PWC, this sector generates least revenues and transaction value in the sharing economy of Europe in 2015, Euro 100 million and Euro 750 million respectively. But the new emerging trend is some startups are striving to go more vertical, hoping to disrupt the traditional way of doing digital marketing business. We have interviewed a French startup specialized in SaaS-powered marketing management solution connecting clients with a curated marketplace of over 8,000 marketing experts worldwide, in order to make marketing campaigns more localized and less expensive. Or as it defines itself in a much simpler way “They are the Uber in marketing services”. Its business model comprises of two parts: 1)commission fees per marketing task (the commission rate is usually about 30-40% depending on country and client brief) 2)Saas platform subscription fees for clients accessing to its premium features and functions. 75% of its current clients are from SME, 20% from the big corporation, 5% from the digital agency. It particularly targets those clients going overseas and spending marketing budget outside their native countries. However, the French startup acknowledged that rivals from the US are simmering a heightened competition in this arena. In Asia, we also detected a very similar platform based in Indonesia. Most marketing professionals curated on it are geographically located in southeast Asia. This perhaps gives it a stronger pricing competitive advantage compared with its western counterparts. We are impressed with the low costs of outsourcing many digital marketing services via this Indonesian startup platform.

In China, on-demand professional services stay as an open book. Chinese platform philosophy is never about vertical or specialty, but always in a generalist approach. A local startup called Ziwork just launched country’s very first and comprehensive freelance platform in August this year, covering job categories from computer programming to finance. Within 18 days, Ziwork proudly claimed it has already attracted over 1,000 corporate clients and over 12,000 freelancers. In many ways, we believe on-demand professional services should be a bright spot of the sharing economy in China in the long run.

It is obvious the concept of sharing economy is taking the world by storm. The US planted the seed, nurtured the Unicorns, but the expansion in a fragmented and highly regulated continent EU can be curtailed. In China, given the government maintains a tolerant attitude, the blossom is within the easy reach, though the success, due to the unique ecosystem of China internet business, should be always in the hands of the local imitators, not the American originators.

Cecilia Wu

A witty, nutty and frosty writer who hopes to jot down moments of inspiration from her daily life

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