Amid the novel coronavirus epidemic, the growth rate of China’s sharing economy will decline around 8 to 10 percent in 2020, and catch up again in the next two years, according to a report issued on Wednesday.
The report from the State Information Center, a government think tank, forecast the annual compound growth rate of the country’s sharing economy sector in the coming three years will remain between 10 and 15 percent.
In 2019, the transaction volume in China’s sharing economy sector totaled 3.28 trillion yuan ($473.8 billion), up 11.6 percent year-on-year. Direct investment declined by 52.1 percent year-on-year to 71.4 billion yuan.
“The sector underwent deep adjustment and integration in 2019. Due to a variety of factors, such as increasing downward pressure on both the domestic and international macroeconomies, direct financing in the sector dropped and the sector’s growth slowed down,” said Yu Fengxia, deputy director of the Sharing Economy Research Center under the SIC.
According to SIC’s report, in the short term the COVID-19 outbreak that occurred at the beginning of this year affected various subcategories in the sharing economy sector. Thanks to users’ migration online of their consumption activities, fields including shared healthcare, online education and food delivery experienced spikes in traffic and transaction volume.
Meanwhile, fields such as shared accommodation, transportation and housekeeping witnessed decreasing orders and sharply dropping sales revenue, as their business requires relatively high online and offline integration and offline purchase activities.
Yu noted from the long-term perspective, opportunities accompany challenges in the development of the sector. In the fight against the epidemic, internet-based technologies are being applied in various fields, and people’s online consumption habits are being better cultivated.
Industrial internet, an important basis of shared manufacturing, welcomes new development opportunities, as the requirement of “attaching equal importance to epidemic prevention and control and development” forces new business sectors to accelerate innovation, she added.
“The epidemic impact will only last for the short run. Once the epidemic ends, the sharing economy sector will be rejuvenated,” Yu said.
Wang Liantao, co-founder of Chinese vacation rental company Xiaozhu Inc, said “in the long term, we are still confident in the industry. Although the epidemic had a knock-on effect on the accommodation industry, it offers us an opportunity to upgrade the platform and improve our services.”
The market will definitely clear, however, they don’t think the epidemic will change the capital market and business development logic in the long run, Wang added.
According to SIC, in 2020 market competition will become more intense and the pace of industry restructuring will also accelerate. Reducing costs and increasing efficiency will become the primary choice for platform companies’ business strategies.
Whether enterprises can bring better experiences and more value to users becomes the key to winning the competition, it said.