The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Thursday, February 8, 2018

Strategic CSR - Sharing economy

The article in the url below sheds light on China's sharing economy. On the surface, the sharing economy in China is expanding at a rate that is almost incomprehensible in the West:
 
"Three years ago, bike-sharing didn't exist in China. Today more than 40 companies offer the service. And the top two alone, Mobike and Ofo, handle more than 50 million rides every day, solving the 'last mile' problem of getting people from public transportation to their homes."
 
As a result of this rapid expansion (or perhaps the reason it has been permitted), the Chinese government has now adopted the 'sharing economy' as a centerpiece of the country's economic development:
 
"The state-run press agency, Xinhua, has trumpeted bike-sharing as one of China's 'four great new inventions.' (The other three are mobile payments, e-commerce and high-speed rail.) It may sound absurd to compare a dockless bike to the world-changing inventions of China's past: paper, gunpowder, the compass and movable type. But the boast conveys the importance that Beijing assigns the 'sharing economy' in helping China make the leap from a manufacturing-based to a service-oriented economy. Last year, according to government figures, China's sharing economy accounted for more than $500 billion in transactions involving roughly 600 million people. (An estimated 55 million Americans will use a sharing service this year, according to a CBS report.) And with Beijing planning on an annual 40 percent growth rate, officials are commanding this new economic engine to account for 10 percent of the national gross domestic product by 2020 and 20 percent by 2025."
 
Digging deeper, however, the author highlights the differences between how the sharing economy is defined and how it is practiced:
 
"China's sharing economy has veered sharply away from how the term was originally defined: as a peer-to-peer exchange of underutilized goods and services. In China, 'sharing' now means almost any short-term rental of a product or service activated by a smartphone. Moreover, the things on offer, like Ofo's 6.5 million bikes, are not spread out among individuals but are owned by the tech companies themselves. The same is true for the spoils, from revenue to data. As a result, the ideals that still animate the concept in many other places — the reallocation of unused resources and the community that forms around it — are essentially absent in China."
 
What I found interesting about the article, however, was the underlying reason for the Chinese government's fixation with the sharing economy:
 
"Robin Li, the chief executive of the internet giant Baidu, said last year that 'the idea of a sharing economy is quite similar to that of a communist society,' because both focus on 'distribution according to need.'"
 
The problem with this is that it runs into the reality of human nature that, even in post-Communist contemporary Chinese society, suggests the 'sharing economy' may be more about convenience than 'need,' let alone trust:
 
"The prize for puffery, however, goes to The People's Daily, the Communist Party mouthpiece, which in August celebrated umbrella-sharing enterprises as 'a show of human care, releasing the warmth of the city.' A few weeks after that, nearly all 300,000 umbrellas distributed by a new company called Sharing E Umbrella had been either lost or stolen."
 
In reality, I think the term is also being stretched in the West. Now, it seems, most Uber/Lyft drivers treat the service they provide as a job, rather than 'sharing' an under-used asset with a stranger, while most Airbnbs seem to be investment properties, rather than someone's couch or spare room. Whether this matters, of course, is another thing. At a minimum, the 'community' that underpins the sharing economy suffers and the technology that founded it becomes merely another platform to bring together buyers and sellers. I remember back to the .com boom around the turn of the century when a company's share price would jump if the company changed its name from Widgit Inc. to widgit.com. The same is happening today with cryptocurrencies, while stories abound about excessive capital flooding Silicon Valley startups seeking returns in a low-interest rate world. While this reduces the importance of the stock market as a means of raising capital (a good thing), it is hard to escape the feeling that there are lots of flimsy ideas floating around fueling speculative bubbles.
 
Take care
David
 
 
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China's Revealing Spin on the 'Sharing Economy'
By Brook Larmer
November 26, 2017
The New York Times Magazine
Late Edition – Final
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