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The Development of China’s Sharing Economy from a Global Perspective

Time:2016-08-16 11:39:01    Views:491577    Origin:Secretariat of Sharing Economy Committee of Internet Society of China

The Sino-US Sharing Economy Industry Conference of 2016, sponsored by Sharing Economy Committee of Internet Society of China and led by Didi Chuxing, was held in San Francisco from May 31 to June 2. Representatives from government agencies or enterprises, including Cyberspace Administration of China, Internet Society of China, Administrative Committee of Zhongguancun Science Park, China Academy of Telecommunication Research of MIIT, China Center for International Economic Exchanges, Chinese Academy of Social Sciences, Didi Chuxing and PP Zuche, attended the conference and consulted with experts from New York University, Stanford University, Airbnb, Lyft, etc. The conference mainly focused on the developing model and cooperative management of sharing economy within China and the US.

  1. Current Circumstance of Sharing Economy in the US

On the history of modern capitalism’s development in the United States, the basic commerce unit had been the family or household before the industrial revolution. Meanwhile, merchants, playing as the role of independent suppliers, were holding the lifeblood of the society’s economy by participating in small businesses or hand making industries. It is easy to see that such trades and employments, whose features might have been called sharing economy if it were in today, have had a long history. What modern digital technology has done is simply bringing us back to the past but familiar time of sharing, individually operating, and community-based economic communications. The organization of economic activities is to usher in a revolutionary and brand-new transformation. The new operation mode will gradually become the mainstream in the 21st century.

The United States is the global leader in sharing economy with over 400 relating enterprises and 20 billion US dollars’ financing. San Francisco and New York, where unicorn enterprises from several industries of sharing economy were born, are the cities containing the most sharing economy enterprises in the world. The accumulating quantity of the two cities is more than the sum of that in London, Beijing, Shanghai and Paris. According to American Action Forum’s research, Uber, Lyft and Sidecar contributed an economic growth of over US$ 519 million in 2014. By the end of 2015, Airbnb had opened its business in 190 countries or political regions covering over 34,000 cities. With over 2 million housing resources benefiting over 60 million tenants, Airbnb reached a market valuation of US$ 25.5 billion.

  1. Problems and Challenges of Sharing Economy in the World
  1. The unfitness of industrial-age supervision form for sharing economy

Based on the premise that the property right is clear, sharing economy, supported by well-developed Internet technology, has a typical feature that the ownership and the right of use is separated. This causes changes in investment, production, consumption, service and urban infrastructure. Nowadays, most laws in the world are legislated in industrial age when smart phones had not yet appeared. Conflictions would arise when applying laws customized to ownership-based commerce to the new business mode.

Sharing economy created a large amount of flexible employments. A survey done on 5,700 passengers and 2,600 drivers by Lyft, the leading ridesharing facilitation company, shows that 78% of the drivers worked less than 15 hours a week, and 86% operated part-time. The current laws and policies on social society, tax and labor are mainly based on full-time employment, which lacks flexibility to fit the need of sharing economy’s rapid growth. For example, early in May this year, Austin, the capital of Texas, insisted that the administration of taxi should also apply to the ridesharing vehicles and all drivers providing the service were required to pass the fingerprint examination. Considering the potential consumption of massive time and costs, Uber and Lyft decided to terminate their service in Austin, forcing over 10,000 drivers out of work.

  1. Lack of support of a national-level guarantee on “everybody-involvement”

In short, sharing economy is by everyone involved and with the help of the internet platform to integrate all kinds of excess consumption data and information. It brings about lowering costs, improving efficiency, creating new production bonuses and consumption dividends by advocating share to everyone and realizing the experiential consumption. Sharing economy should be inclusive, and people from all age, all background and all income level should benefit from it. So how to implement it? For example, a lot of platforms require to use credit cards, but how can the low-income group participate in without a credit card? To figure out these puzzlers, the sharing economic strategy must be incorporated into the whole economic development and productivity goals.

  1. Difficulty for enterprises accessing government data to examine the credit security

Under the sharing economy mode, the boundaries between the producers and consumers become blurred. The ownership and the right of use of goods and service are separated temporarily, which requires a high degree of credibility and security. Platform enterprises should pay attention to supervise the registered users’ security and credit reviews. They should build up a traceable and scientific credit security review system, and establish a perfect safety accident disposal and coping mechanisms. However, the effectiveness of security credit review is declined because of the difficulty of enterprise docking and accessing to government data.

  1. The Experience of Promoting Sharing Economy in Developed Countries
  1. The supporting strategy of in different country and city

Developed countries are putting forward on several aspects about sharing economic strategy. Seoul government proclaimed its Sharing City Seoul Project on September 20, 2012. Seoul Innovation Center set up a government department of a sharing economy specially. In 2013, 15 cities, including New York, Boston, Philadelphia, Chicago, Los Angeles and San Francisco, signed agreement on sharing city, and announced its support for sharing economy. Britain has put forward to build a "sharing global economic center" from the national level since 2014. It has designed and introduced a package of policies. Amsterdam sees sharing economy as an important element of environmental sustainable development strategy. The Green Deal program is a successful model. It was found jointly by more than 30 stakeholders, working towards a common goal which is increasing the number of car-sharing up to 100,000 in Netherlands in 2018. The details of the policies are specified below.

  1. Funding of supporting sharing economic city and project

South Korea allocates funding for over 50 city-level economic projects of sharing economy. In Britain, sharing economy was incorporated into state budget in 2015, and the country allocated US$1.1 million to the two pilot cities of sharing economy.

  1. Encouraging start-up under sharing economy

Seoul government of South Korea has supported many sharing-economy-related organizations and enterprises by providing office space, consulting services and expenditure etc., which is worth over 470 million won.

  1. Popularizing the idea of sharing economy in education

European Union has infiltrated the concepts and the principles of sharing economy in all different education levels step by step, in order to promote the consciousness of sharing economy when the student are still young.

  1. Laying down the law of sharing economy under cooperation of the government and the enterprises

Developed countries have taken action, combining enterprises and government to revise the relevant laws and regulations of sharing economy. Lyft Company has cooperated closely with the government. 33 states have amended the current traffic laws, and admitted Lyft as legal in the field of transportation. Tax rate of ridesharing activities has been reduced in cities like Chicago, Boston and Portland. In San Francisco, most ridesharing parking slots are provided by the street municipal with a discount. Currently, Lyft and the Federal government are trying to solve the problem of the legislation of driverless cars. In the US, Airbnb has participated in the government’s decision-making along with industrial associations, lawyers, housing providers and consumers, which drives the compliance of individual housing renting.

  1. Encouraging industrial self-regulation

In the Middle Ages of western world, self-regulatory organizations (SROs) like the guilds of merchants or craftsmen emerged. Committee members were under strict regulations on salaries, tools, skills, qualities as well as prices, making SROs an indispensable part of economic development. SROs have strong control, high compliance and even can be judicial authorities. Company autonomy and self-regulation has become an important method of supervision of sharing economy in countries like the US. In order to supervise and cooperate with online platform of ridesharing services, transportation network companies (TNCs) were defined as companies in the state of California in 2013. The government standardizes requirements of licenses, insurances and operations for drivers and vehicles, and online platform is responsible for vehicle management, driver admission and daily supervision.

Successively, the UK, Korea, and European Union set up SROs for sharing economy. British Chambers of Commerce established Sharing Economy UK (SEUK) in 2014, working on promoting sharing economy’s benefits, commanding firms to offer staff training, developing safety guidelines and supporting related studies. British government and SEUK released a report of sharing economy in the UK in February 2016, providing supports for government decisions.

  1. Undergoing scrutiny with use of big data

Lots of representative cities of sharing economy have explored building data analysis with companies, impelling development of data-driven delegation. For example, Lyft, the American ridesharing platform, has generated numerous reliable data through rapid transportation system in several cities of the US, which has effectively facilitated policymaking. By doing so, there is less risk of data leakage compared to checking real operation data from platform by the municipal government or the state government.

  1. Suggestions on Promoting the Development of Sharing Economy in China

Nowadays, there is roughly 700 million netizens in China, 2.2 times of the US total population and nearly the total population of Europe. Some internet enterprises rank among the top of the world, and especially in sharing economy, China is taking the lead in the world, whose main features are tremendous volume and scale, wide range of sharing domain, and rapid development. In the past few years, there was more than 1.4 million registered drivers under the platform of Didi Chuxing and over 300 million registered users. The total amount of orders was 1.43 billion in the last year, which was by far the largest in the world. According to some studies, China is predicted to achieve 40% annual growth for sharing economy in the coming five years, while the market size will be more than 10% of the GDP in 2020. Here are the suggestions:

  1. Formulating policies to protect sharing economy from a national level

It is suggested to make development strategies for sharing economy from a national perspective to deal with great supply-demand contradiction issues, in areas such as housing, transportation, finance and intellectual skills. Approaches including simplifying registration procedures, tax reduction and offering financial aids will attract more social capital entering the sharing economy.

  1. Promoting co-administration under the government’s guidance, enterprises’ self-regulations and industries’ self-disciplines

In principle of co-administering under the government’s guidance, enterprises’ self-regulations and industries’ self-disciplines, a coordinated regulatory framework should be set, and a supportive social credit system should be developed. After convincible investigations, industrial associations can provide recommendation on surveillance to the government, after which interested parties could then discuss and examine. This win-win administration method, which is the idea of “government manages platforms; platforms formulate detailed rules”, can be promoted. Meanwhile, to create favorable development environment for sharing economy, enterprises should take the initiative on social responsibility. By strengthening the construction of their own credit systems and supervision systems, the enterprises can also advocate the establishment of a social credit system.

  1. Advancing collaboration between the government and enterprises

In the aim of ensuring credit vetting by platform enterprises, the government should disclose public data, form credit authentication market, and introduce stringent personal information protection ordinance. With data sharing, platform enterprises can build up scientific safety management systems, accelerate the expansion of sharing economy and promote employment, which would lead to a better society.