/Umbrella rentals are the latest sharing economy fad to hit China

Umbrella rentals are the latest sharing economy fad to hit China

Inspired by the huge success of house and car sharing startups, new rental businesses for odd items continue to emerge from China’s sharing economy hype. Just as the heated and controversial debate of the power bank rental business continues, umbrella rentals have become the latest sharing fad.

Over the past month, three umbrella sharing startups have raised financing of several million RMB (around USD 1 million) as industry experts and insiders continuously question the business logic. How do these companies run umbrella sharing businesses? Is the business really profitable or just a market bubble? Here is a look at several startups in the sector and insights from industry insiders.

Why the large financing numbers?

Gongxiang Esan from China’s southeastern city of Guangzhou last Wednesday secured RMB 10 million (USD 1.5 million) of angel investment. Its app functions in a similar way as bike-sharing apps. The app shows the locations of nearby umbrellas, enabling the user to rent an umbrella after inputting the umbrella’s code into the app to unlock the password.

The company sets rental fees of the umbrellas at RMB 0.50 per half-hour use in addition to a RMB 19 deposit. Users are charged only when the GPS embedded umbrella is opened up for use. The startup also allows users the option of either returning the umbrellas to public locations or bringing them home.

A Gongxiang Esan umbrella. Photo from 4ygx.com
A Gongxiang Esan umbrella. Photo from 4ygx.com

Another Guangzhou-based startup Molisan provides umbrella rental services in a slightly different way. It has designated umbrella rental stations at public locations such as subway stations and cinemas, and one rental station can hold up to 50 umbrellas.

To rent a “Moli” umbrella (“san” is the English romanization of the Chinese word umbrella), the user does not necessarily need to download its app. The user can rent and return the umbrella by simply scanning a QR code at the station with WeChat. Molisan charges a RMB 20 deposit and offers free use within 15 days after the first use. After 15 days, it will charge RMB 2 per day.

A Molisan umbrella station. Photo from Molisan.cn
A Molisan umbrella station. Photo from Molisan.cn

Other than these two startups, Shanghai-based Chunsun last Monday raised RMB 5 million for its angel financing round and JJsan on Sunday secured around RMB 1 million in angel investment.

Will it work?

Deposits are one major source of profits for these startups, as Chinese analyst Panshi Zhixin was quoted in a report. “Deposits bring in massive capital and these companies can use the money to make investments,” said Panshi Zhixin.

Zhao Shuping, founder and CEO of Gongxiang Esan, told local media that the company can earn income by displaying advertisements on these umbrellas.

The drawback for this new umbrella rental business is whether there is real consumer demand for it.

Customers only use umbrellas depending on the weather conditions of certain days. It is still unknown to what extent consumers in China’s northern cities, where there are less rainy days, will welcome this new business model.

Another reason is that cheap umbrellas are sold everywhere in subway stations and other public locations on rainy days. The price of these umbrellas range from RMB 10 to RMB 40. Many people riding the subway can just purchase an umbrella at a cheap price.

From sharing bikes to power banks and now umbrellas, what will be China’s next sharing fad?

(Top photo from Pixabay.com)

Wang is a contributor at ACT. She is passionate about literature, photography and technology. She graduated from Shanghai University of International Business and Economics.