There’s strong potential for the sharing economy in China, according to the latest research from market intelligence agency Mintel. Today, just 30% of urban Chinese consumers say that they only want to use brand-new products, highlighting the significant potential of buying second hand products and renting.
When it comes to the type of products that consumers have either rented or bought second-hand, bicycles/electric bicycles come up tops—with a staggering 91% of Chinese consumers saying that they have rented or bought second-hand bicycles/electric bicycles in the past year. This is followed by cars (61%), books/audio-visual products (25%), digital products (e.g. mobile phones, cameras) (25%), furniture (18%) and home appliances (e.g. fridge) (12%). While the clothes and accessories sharing category has been making headlines, just 9% of urban Chinese consumers have rented or bought them second-hand.
“The current consumer landscape in China shows great potential for the sharing economy to develop further,” says Scarlett Zhao, associate research analyst, Mintel China reports. “Largely driven by substantial promotions and subsidies, at the moment high penetration in rental and second-hand businesses is more focused on the transportation industry; including cars and bicycles. But while the sharing economy in China is dominated by transportation, we see this trend slowly extending to knowledge sharing through books or audio-visual products. At the moment, consumers are not as open to other product categories in the sharing economy space such as clothes and accessories, probably because consumers have not yet cultivated the habit to rent or buy second-hand products. China’s sharing economy still stands in an emerging to growth stage, where market rules and regulations need to be further improved. As a result, this has caused many to remain on the sidelines just like when e-commerce was first introduced.”
Price vs planet
Mintel research reveals that the majority of consumers in China acknowledge the benefits of the sharing economy, with as many as 86% of them appreciating the convenience that sharing products and services bring. Meanwhile, three in five (59%) Chinese consumers cite affordability as a reason to participate in the sharing economy, making it the greatest motivation for them to choose renting or buying second-hand products.
Environmental factors are also proving important to consumers, as half (51%) of urban Chinese consumers say that they will rent or buy second-hand products as it is good for the environment. When it comes to Mintropolitans, being good for the environment (63%) trumps affordability (54%) as the top driver for participating in the sharing economy.
Mintropolitans are broadly defined by Mintel as those who represent a significant, sophisticated consuming group (aged 20-49) who pursue quality of life rather than just wealth, are well educated, and are the potential trendsetters.
“The fact that consumers are placing such an emphasis on environmental factors when choosing to partake in the sharing economy aligns with the Mintel Trend ‘Total Wellbeing’. Under the healthy wave, consumers today not only look inward to their body health, but are also paying more attention to the whole ecosystem they are interacting with. When communicating with and marketing to consumers, companies in the sharing economy space can make consumers feel good about themselves by emphasizing how this concept can help reduce the carbon footprint—benefiting the public and the environment,” Zhao continues.
Finally, Mintel research shows that while they are confident in the sharing economy, some Chinese consumers still have concerns over sharing products and services. Over two-thirds (67%) of urban Chinese consumers say that product quality is not guaranteed and 63% are afraid of personal information leakage. What’s more, at least half of them believe there are insufficient background checks on sellers on trading platforms (57%) and are concerned over the lack of government regulations (52%) and dispute resolution processes (50%).
“Our research indicates that Chinese consumers have relatively low levels of trust for the sharing economy market. Compared to new products, it is hard to monitor and control the quality of used products. There are also companies that rely on subsidies and discounts to attract users in the initial stage; and as it is difficult to achieve profit in a short time, some of these companies sell user data to make money. What is more, consumers feel that there are insufficient background checks of sellers and transaction rules from the government and sharing platforms. Moving forward, if the sharing economy is to achieve full market potential, then brands will need to take on more responsibility in mitigating these trust issues,” Zhao concludes.