Photo/Shetuwang

Jan. 16 (NBD) -- China's rental market is expected to break 10 trillion yuan (1.5 trillion U.S. dollars) in 2020 and over 100 million people will engage in rental services at the time, according to a report on renting economy by Shanghai-based think tank SIFL Institute.

The past 2018 saw enterprises of sharing economy such as Ofo and bluegogo be caught up in waist-deep hot water of "deposits".

Fu Weigang, executive president of SIFL Institute, held that bike-sharing, though is a renting form in essence, yet differs from traditional rental businesses. "Bike-sharing enterprises make deposits part of their profit model, whereas the outlook of their own businesses is small," Fu said to the 21st Century Business Herald.

The report released by the China Consumers Association last December showed that the number of complaints related to sharing economy rose in 2018, and 71.8 percent of the cases related to shared bikes complained about difficulty in refunding deposits.

In the views of Fu, bike-sharing companies' collecting deposits from users is equivalent to fundraising where huge risks are hidden. "Currently, there isn't much time left for firms that still rely heavily on deposits to make a change," Fu said, adding that users had nursed a grievance against the deposit model and the model started losing popularity.

Fu believed the credit-based rental model will in the future usher in new development space, and it can, to a certain extent, put an end to chaotic deposit abuse.

Tech giants such as Alibaba, Tencent and JD.com as well as media organization The Xinhua News Agency have already set up their credit units, trying to directing rental consumption.

The year of 2019 will see sharing economy enter the second-half of the game, and credit-based new renting economy, which can help lower threshold for users and reduce capital risks, will take place of deposit-dependent sharing economy and become a development trend of the industry, Fu predicted.

It's noted that some platforms providing deposit-free rental services have reached the break-even point due to huge customer influx. But they still need to solve problems like lagging after-sales services and unqualified products.

Gao Limin, researcher with SIFL Institute, noted when credit replaces deposit, cost will be further cut, which can lead to bigger customer demand. Under new market environment, those rental platforms will play a bigger role, not only settling the trust issue, but also bringing about traffic benefits, Gao added.

Email: gaohan@nbd.com.cn