I take quarterly weekend trips to China to stay in the loop of the tech scene there. It’s substantially different every time I visit. Recently, I took another trip to Shanghai and Beijing; here are some observations.
The sharing economy
The biggest change this time compared with the last was that almost everyone on the streets of Beijing was using a bicycle-sharing service. Ofo and Mobike were the most popular, followed by Bluegogo, on the streets of Beijing. Even my mother uses them. In fact, she already has three bike-sharing apps. She calls them the yellow, orange and blue bikes.
US news media have just started to pick up on this phenomenon (a little bit late). At the same time, at least five or six bike-sharing companies have entered the US market to my personal knowledge. It’s easy to think this might be the biggest thing in the US as well, following the success of the Chinese cycling unicorns, but the two markets are substantially different. Here are some of the big questions for American investors to think about.
- Does people’s behavior need to change? Bicycles as transportation have a long and illustrious history in China. There are bike-only lanes in most cities. In places where the bike lanes aren’t so obvious, people ride them on sidewalks all the time. Bikes as transportation and last-mile delivery are natural and organic for Chinese citizens. How many people in the United States use bicycles as transportation? Do they ride the bikes in lanes shared with cars?
- Do people need to share helmets? No one wears helmets in China (masks and umbrellas are in fact more common than helmets). How many cities in the United States do not require helmets? How would you feel about using a helmet dozens of others have sweated into?
- Parking problems. You can park a bicycle practically anywhere on the street in China. Technically, it’s not allowed, but I saw bikes everywhere during my short trip to Beijing, including in the middle of a highway. Bike-share companies are expected to put major work into negotiating with cities to solve parking problems. Will US cities live with these problems – even in the short term?
- Could this be a way to initiate e-payment accounts? One of the main reasons Chinese tech giants have backed bike-share companies is that it’s a relatively low-friction entry point for new e-wallet customers. Users only pay a negligible amount to use a bike, but the creation of new accounts and linking of bank accounts is what these payment giants sought. This makes a lot of sense, because it’s getting harder and harder to convince investors that they’ll break even based on the fees charged for a bike alone – the competition is so intense that the bike-share companies are almost paying users to use the bicycles. I paid zero to ride for hours by switching across multiple companies. Does this logic make any sense in the US context?
- What is the exit strategy? Tech innovators in China expect to be acquired by one of the tech giants, all of which want to enter the same hot market. If a company does well, the chances of getting to a handsome exit is pretty high. This might be a positive sign for Chinese and US investors looking to invest in bike-share companies. Does anyone think this way in the US?
As the bike-share market starts to peak in China, other kinds of sharing-economy concepts have been introduced – sharing phone chargers, umbrellas, gym passes, you name it. It seems like everything is becoming cheaper and more accessible to everyone everywhere. I came across a single-person KTV booth in a mall next to the hotel I stayed at in Beijing for people who need a fix on the go.
Powerful personal assistants
I’m a fan of human-powered artificial intelligence and virtual assistants. If you live in the Silicon Valley, you’ve probably heard of or have used one of the personal AI assistants (Amy, Clara, Magic or Fin). A friend recommended a Chinese version called Laiye before this trip, backed by Sequoia China, which made my life much easier (I have no relationship with Laiye).
Laiye is different from the US virtual assistants. It does pretty much everything I can think of: on-demand coffee, scheduling via WeChat, booking cars, finding maids, sending packages, procuring on-demand massages, booking plane and train tickets, etc etc. I used Laiye three times and was impressed each time.
Laiye integrates with popular services, so when I asked for coffee, it showed me a menu of different coffee options from Starbucks and asked me to pick one. Laiye assigned the task to a worker who delivered the coffee to me in person. The whole experience end-to-end took 19 minutes; the transaction on my side took less than a minute. As a consumer, it made a big difference for me for the following reasons.
- It removed the friction of setting up the app and the payment method for every app I need use. I now have one interface and one payment channel and I can enjoy every service. This is particularly useful given the ever-evolving landscape of apps.
- It was super-efficient and reduced the time I needed to spend on things like calling a provider, finding a delivery window that worked for me, putting it on my calendar, etc. With the app, products and services come to me.
The question, of course, is whether virtual-assistant providers will be able to offer consistently impressive levels of service when they’re trying to run a profitable business. I only used Laiye three times. I suspect such apps have significant operational challenges, especially on the delivery side during rush hours. Doing one task well (such as scheduling) is already hard, let along doing five to 10 of them well.
One thing they do very well is integrating with many products or services and standardizing a big portion of each task. The more integrations they have, the more useful they become.
China’s tech scene is innovating at an unprecedented speed. I would not be surprised if more US companies started to follow China’s lead in such areas as the sharing economy, personal assistants, financial technology or chat apps.
This article was originally published on the author’s Medium account.