Author: Cao Zhongxiong, Executive Director, New Economy Research Department

Overview: Mobike’s acquisition and Didi Chuxing’s dilemma mark that the sharing economy is entering its difficult times. In the future, the mobile transportation platforms need to think about how to make profits; otherwise they are doomed to be merged.

The sharing economy can integrate all kinds of dispersed idle resources, solve the problem of asymmetric information, and accurately find diversified demands, so that the resources can be efficiently reallocated. However, concern about the prospect of the sharing economy has been exposed by the acquisition of Mobike and Didi Chuxing entering a difficult time.

Mobike’s acquisition and Didi Chuxing’s dilemma show that the sharing economy is faced with three difficulties: firstly, it starts with “free user charge” and might be ended by “free user charge”; secondly, it excessively pursues the user growth; thirdly, it only focuses on financing instead of making profits.

The mobile transportation platforms need to operate as an enterprise. Firstly, the sharing economy enterprise must be profitable. Secondly, the sharing economy needs to reduce its operating costs. Thirdly, the sharing economy needs to be regulated by authority when it involves with social benefits and consumer protection. As long as the mobile transportation platforms create sustainable revenue, the integration can be avoided.