Would Collaborative Consumption Work in China? Not Yet.

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The concept of ‘Collaborative Consumption’ (let’s call it CC) is not very new in the West but it is in the East and especially in China. If you are not familiar with the term, CC basically means sharing what we have with other people, in a way that promotes access to something rather than ownership. You might simply think this is renting, but the internet has pushed it beyond that, and instead created much more powerful and popular ideas and business models.

The ‘Collaborative’ part means that we can utilize the assets of a group of people. Assets could be things like a car, a bedroom, time, money, skills…almost anything. The ‘Consumption’ part means that we can trade these assets to fulfil our desires. Much of this dynamic has been enabled by technology that allows us to create and form networks in a very efficient way. By connecting with one another online, the speed and scale of the network can grow so quickly that it is impossible to know each other on a personal level. All we can care about is, 1. Do they have what I want 2. Can I trust them to give it to me.

To explain what CC is in a more practical way, here are some famous examples from America. Airbnb, is a website that allows people with spare room to rent it out to other people. It was an evolution of Couchsurfing.org that allowed people to lend a spare bed for travellers. Launched at TechCrunch Disrupt, Getaround is a car sharing site that allows people to rent out their cars to people when they are not using it. Taskrabbit is a site that allows people to sell their spare time to other people, for example, if I need to someone to pick up my dry-cleaning or do my grocery shopping I can find them. Lendingclub is a site that matches money lenders and borrowers. Skillshare is a site that allows people to teach people their skills.

There are a plethora of new models like this that are changing society from hyper-consumption to hyper-utlization. It makes sense for us to maximize the value of our things, so it’s not wasted. That’s also why, sharing things means we don’t always have to own something, but can instead borrow it from someone else. This makes it cheaper for someone who doesn’t need it all the time and generates extra money for the person lending it out. Rachel Botsman gave a TED Talk in 2010 and explained that this model of sharing helps the world by extending the term that is often used for environmental protection “reduce, re-use, recycle” and now “re-distribute”. The implications of this are massive. It can greatly reduce the need to manufacture or produce as many things in the world, thereby saving the environment or using up tonnes of unnecessary energy, electricity, money and other resources. However CC might worry companies because they will no longer be able to sell as much. I guess its payback time for all the companies that purposefully manufactured products to last less time that it potentially could, so we had to buy more .

Of course a pre-cursor to us using such sites or CC platforms is trust. However the internet over the past ten years has already started to build in mechanisms that solve such issues. There are ratings, reviews, comments, background checks, scores etc. Botsman points out in her talk that, since we spend so much time online, we are leaving traces of our personality and credibility everywhere. Instead of people needing a credit history to prove they are reliable, all the transactions, comments and interactions we’ve made online will form the value of our “social currency”.

Now getting back to the title of this article; ‘Would collaborative consumption work in China?’ China is a rapidly developing economy and society, however in my opinion; it still has some obvious obstacles to fully implementing CC models. The second part to how CC functions is ‘Can I trust them to give to me?’ But in China, this is exactly biggest problem – the lack of trust. You can see it on the streets; people don’t really trust one another. Usually it is the foreigner that is told to hold their bag in front of them, in case they are robbed. But in Beijing at least, I see Chinese people holding their bags in front too. There are so many people in China that the range of characters and trustworthiness immensely varies too. Even Chinese people tell me there is a trust issue in China. When stories stick in peoples psyche about people cheating each other at the market or even government officials being corrupt, really who can you trust?

In the e-commerce space trust is an issue that has had to be resolved to function properly. Alipay, the payment gateway of Alibaba or the PayPal of China, solved much of the problem by working as an escrow system. Money is paid through Alipay, the goods are delivered, when goods are received, they money is released to the seller. China needed this system before it could really boom into such a huge e-commerce industry. However CC and e-commerce are different, whereby CC has a stronger focus on the person.

I know friends who are working on CC models in China and have the vision to unlock the full potential of assets, reduce waste and save the environment. This is a great mission and should be pursued in China. However I think that it will be a challenge to make it widely embraced in China, at least now.

  • http://www.kailukoff.com Kai Lukoff

    Excellent article, Jason. There’s still a severe lack of what Francis Fukuyama calls “social trust” in China’s economy. It strikes me that trust networks are very limited to family ties and close friends, but towards strangers, forget about it. It seems to me that Chinese are raised with a deep distrust of strangers, and can hold a caution, mistrust beyond even what should be merited.