China Issues Regulation of Sharing Economy Companies, Maintains Crackdown on Monopolies

The Chinese government warned on Thursday that companies involved in the sharing economy need to comply with regulation and price their services properly.

The three largest players in the bike-sharing market, including Alibaba-backed Hellobike, Didi Chuxing’s Qingju and Meituan are among the firms warned. Others included five separate power bank rental service providers including Energy Monster and Laidian.

Regulators ordered that the companies must follow the country’s price and anti-monopoly laws and fix various pricing problems.

This is the second formal warning the sharing-economy companies have received within one month. In May, Bloomberg reported that market watchdogs summoned ride-hailing companies including Didi Chuxing and Huolala, criticizing the companies for violating their driver’s rights, controlling the logistics data and predatory pricing.

The sharing economy in China has continued to develop even amid the pandemic. Last year, the sector reached about 3.38 trillion yuan in total transactions and achieved a 2.9% year-on-year growth, according to a report on the sharing economy published by the country’s National Development and Reform Commission.

But complaints about surging and unclear prices have increased. For instance, state-run news agency Xinhua reported that there have been more than 2,000 complaints regarding Laidian. The price of Hellobike has also reportedly increased significantly, while the International Financing Review revealed that the Ant Group-backed bike service firm plans to file an IPO within this year.

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The sharing economy report points out that there are some urgent problems in the sharing economy industry, namely that the sharing economy market is overshadowed by just a few players which have engaged in various forms of misconduct such as improper market dominance, data abuse and monopolistic expansion.

Yang Guoliang, professor at the University of International Business and Economics comments that the platforms serve as a “place” for collecting and processing supply and demand information. Therefore, platform companies can easily control the trading activities which may form a monopoly.

The National Development and Reform Commission estimates that the average annual growth rate of China’s sharing economy will remain around 10% in the next five years, and that governing bodies will continue the anti-monopoly crackdown to regulate the market.