(Yicai Global) Nov. 17 -- China’s power bank rental firms, which hire out charging stations for mobile devices in shopping malls and other public locations, are having difficulty making money as stiff competition between rival brands means that companies have to pay high admission fees and commissions to get access to prime locations.

Industry leader Energy Monster’s profit margin in the first half was only 1.28 percent, much lower than 2.7 percent last year and 8.2 percent in 2019, according to Yicai Global research. It is also paying huge commissions of up to 75 percent of charging rates. And its incentive rate, which is the amount paid in admission fees divided by rental income, was 58.1 percent last year from 48.2 percent in 2019.

Stores are asking for more admission fees and commissions as competition in the sector heats up, which greatly hurts power bank rental firms’ profit margins, said market analysis firm iResearch. Hangzhou Xiaodian Technology paid CNY1 billion (USD156.5 million) in admission fees last year, double what it did in 2018.

Even the stores that charge the commissions are complaining there is little money to be made. Chen Ling, who runs a busy restaurant near a Shanghai subway station, was one of the first outlets in the city to offer shared charging stations and she earned a lot back then, she said. But now, nearly half of the restaurants on her street offer power banks and this month she only made CNY9 (USD1.50), she said.

Xing Wei has a shared charging station in his store and was hoping to earn up to CNY500 (USD78) a month, but he rarely gets more than CNY200 a month, he told Yicai Global. He plans to remove the cabinet because it takes up too much space at the store entrance and needs a lot of maintenance.

Less charging options near a store is obviously better for the shop, but rental firms need to increase installations in order to earn more, said Shi Huilun, an analyst with LeadLeo Research Institute. Xiaodian Tech had six million shared power points in over 710,000 stores as of the end of last year and Shenzhen Zhumang Technology more than one million.

Companies’ profitability is likely to continue to drop as better battery technology means users will charge their phones less frequently, iResearch said. They need to develop a second business in order to achieve growth.

As a result, power bank rental firms have had no choice but to raise their rates to survive. They now charge between CNY4 (USD0.63) and USD6 per hour, compared with CNY1 a few years ago.

However, there are some winners. Those outlets in prime locations such as scenic hot spots and trendy shopping malls can do very well. A restaurant in downtown Shanghai can easily have 60 charges made a day and earn more than CNY90,000 (USD14,000) a month, a restaurant worker told Yicai Global. For instance, Energy Monster, which listed on the Nasdaq earlier this year, has reached exclusive deals with Shanghai Disney Resort and Shanghai Happy Valley.

Editor: Kim Taylor