Chen Wei&Nathan Blecharczyk: What If Regulators Failed To Keep Up With Innovation In Sharing Economy?

(Chinese Version)

Chinese car-hailing firm Didi Kuaidi is thriving at the moment. On September 9th, the third anniversary of its first launch, it was renamed as “Didi Chuxing”. On the same day, Didi Chuxing set out to raise a new round of financing at a valuation of 3 billion USD. Undoubtedly, Didi Chuxing has already become the most representative player in Chinese sharing economy.

Airbnb, the bellwether of American sharing economy, announced officially that it would enter the Chinese market last month, and is seeking for allies rather than competitors.

During this year’s Summer Davos, held in a port city of Northeastern China’s Liaoning Province Dalian on September 9th, Didi Chuxing’s spokesperson confirmed that it had already raised enough financing from China Investment Securities and Ping’An bank and closed the new round of financing. At the same time, Nathan Blecharczyk, the co-founder and CTO of Airbnb, revealed during the summit that in order to avoid competition with its Chinese counterparts, Airbnb China would first of all devote most of its efforts to establishing its brand image among the huge number of Chinese outbound tourists, who are in desperate need of apartment-renting information overseas.

At present, innovation in the Internet industry is rapidly changing the world we live in. Sharing economy is exactly a fruit of the rapid development of the Internet industry, and is increasingly expanding its influence to more aspects of our lives. As the most representative player in Chinese and American sharing economy respectively, Didi Chuxing and Airbnb have their own understanding of the market. During this year’s Summer Davos, Chen Wei, the founder of Didi Dache, and Nathan Blecharczyk, the co-founder of Airbnb, shared their opinions on diverse topics, such as what’s the future of sharing economy, how to address regulations and competition, and how to win traditional industries’ trust, etc. TMTpost summarized their insights as follows:

On competition and monopoly

Chen Wei: Didi Chuxing isn’t a monopoly

After a whole year of fierce competition, Beijing-based Didi Dache and Hangzhou-based Kuaidi Dache, China’s two major taxi-hailing apps, merged together at last. But it is natural to ask: will the new company become a monopoly? Chen Wei disagreed and suggested that: “On the contrary, Didi Kuaidi is in hot water and facing fierce competition from various rivals.”

However, he admitted that the merger brought two separate platforms together and enabled Didi Kuaidi to provide better services for passengers and drivers. “The larger our platform is, the more we could do to boost sharing economy in China,” said Chen.

He added that: “Competition is the rule in the Internet industry.” In his opinion, competition in the Internet industry is far fiercer than that in traditional industries. “In the thriving Chinese Internet industry, the battlefield has shifted from marketing channels to specific sectors,” he explained.

Nathan Blecharczyk: Airbnb faces fierce competition from Chinese counterparts

Nathan Blecharczyk reiterated on the importance of the scale of a company and said that: “Larger scales begets huger profits, and should be beneficial for every player in the market.”

Is Airbnb a monopoly then? Blecharczyk didn’t think so. He said that Airbnb was never in short of competitors, especially in China. “Although Airbnb is larger in scale, our competitors are also developing fast. Worse still, there are so many similar service providers in China.”

On regulations

Chen Wei: Didi Chuxing is reaching a consensus with the regulators

On the one hand, the numerous high-value companies brought about by the sharing economy are overthrowing traditional business models; on the other hand, they are envied and even hated a lot. Regulators also failed to roll out concrete rules to regulate these companies. That’s why Didi is constantly fearing “questioning” from regulators.

Chen Wei admitted that today’s rules were set out based on past business models, while the Internet industry was creating new business models every day. “Although regulations seem to have failed to keep up with the development of the Internet industry, we are reaching consensus with the regulators,” Chen was optimistic about the future of sharing economy.

Nathan Blecharczyk: Innovation can also be not welcomed

As did Didi Chuxing, Airbnb also faced fierce competition from traditional industries in many countries. How can Airbnb make sure that its development will not come at the expense of companies from traditional industries? Blecharczyk admitted that: “Innovation are sometimes not welcomed in some countries, but I am confident that ‘the times they are a-changing’. For example, British insurance companies at first were not willing to provide insurance services to houses on Airbnb’s platforms, but at last they changed their attitudes and cooperated with us. To some extent, Airbnb, together with our large number of users, have forced insurance companies to adjust themselves.”

However, Blecharczyk is looking for dialogue and interaction with more government officials and shareholders of traditional industries, to win their trust and support. As long as we win the support of our competitors and regulators, we are almost successful.

On innovation

With the boom of sharing economy, the way we commute, travel, raise & borrow money, and live has all changed a lot. Cars, houses, work places, luxuries, labor and even time can be shared with others. Innovation and change have always been pushing the development of Didi Chuxing and Airbnb. So what do they think have they changed?

Chen Wei: Didi turns what Uber failed to do into reality

During the summit, Chen Wei showed the audience some statistics from Didi: At present, Didi Chuxing has more than 8 million registered drivers and 200 million registered passengers. More than 10 million users are enjoying Didi’s services every day.

For Chen Wei, innovation is driven by increasing needs and problems. “A year ago, we only provided taxi-hailing service; four months ago, we rolled out Kuaiche service; three months ago, we launched Shunfengche service; a month ago, we carried out bus express service. As problems come up one after another, we came up with new services within a limited period of time.

At first, we only wanted to develop a taxi-hailing app. Nobody (not even Uber) had expected that we would later on develop so many more services and fully integrate car-hailing with the Internet at that time. When we connected passengers with taxi drivers, we found that taxis are not enough. When we increase the number of cars, we found that traffic could be a huge problem. So our next challenge is to ease the traffic jam.”

Chen Wei even predicted that one day, nobody would buy a car of his or her own, and no government would allow citizens to buy cars. The world would then transform from ownership economy to sharing economy.

Nathan Blecharczyk: Airbnb also encourages interaction between different cultures

Via Airbnb, house-owners can rent their vacant rooms to strangers. According to Blecharczyk, there are already 1.5 million pieces of house-renting information on Airbnb at present. More than 1 million people rent houses via Airbnb every day. The market value of Airbnb has already surpassed 25 billion USD.
For Blecharczyk, Airbnb not only helps people to rent their houses more easily, but also provides opportunities for people from different cultures to interact and communicate with each other.

 

[The article is published and edited with authorization from the author @TMTpost-Chinese, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.

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