Users Are Losers as Bike-Sharing Firms Ride Off
Zhang Xia
DATE:  Nov 21 2017
/ SOURCE:  Yicai
Users Are Losers as Bike-Sharing Firms Ride Off Users Are Losers as Bike-Sharing Firms Ride Off

(Yicai Global) Nov. 21 -- Several bike-sharing companies have gone out of business, and many of their users have not gotten their deposits back, highlighting an issue with deposits in the bike-sharing industry.

USD227 million (CNY1.5 billion) worth of deposits in the sharing economy have become unrecoverable in the past six months, 21st Century Business Herald quoted insiders as saying.

China had 106 million bike-sharing users as of June, and their deposits were worth CNY10 billion assuming they put up CNY100 apiece on average, per a report from the China Internet Network Information Center. Other sharing services, including ones for cars, likely put the value of deposits in the sharing economy at CNY15 billion.

The sharing economy lacks explicit regulations on the use and return of deposits. While many users have grumbled about this, they did not know which department to file complaints with due to a deficiency of policies and regulations.

The sharing economy still has great potential in China, and the key lies in credit building, said Zhang Zheng, head of the China Credit Research Center. "Today's sharing economy has vague boundaries and entry thresholds that are too low," Zhang said. "If we fail to improve our credit system, it will affect the size and efficiency of the sharing economy in the future."

Waving deposits based on credit could help mitigate user risks, said Song Gang, associate professor at Beijing Normal University Law School.

Credit systems have been increasingly applied to the leasing sectors and the sharing economy. As the social credit system improves, more platforms may abandon collateral requirements. Some industries such as the portable battery sharing sector adopted more sophisticated operations after experiencing erratic early growth and no longer rely on deposits.

Most of them do not require deposits, said Hu Tao, vice president of Ant Financial Services Group, which owns Alipay. "We hope that the sharing economy will upgrade into a credit economy," said Hu, who is also the general manager of Alipay's credit platform Zhima Credit. "Otherwise, it will be difficult to protect the interests of users, which will hurt the healthy development of this high-potential industry."

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Keywords:   Sharing Economy,BIKE-SHARING