Chinese tech giant Baidu (NASDAQ: BIDU) has decided to terminate its Lanhuo Mutual Aid platform by September 9, the company announced, “to protect the rights and interests of users,” as the number fell short of 500,000.
Baidu launched its mutual aid platform last year in November, as a response to Alipay’s “Mutual Treasure” aid program. Since the release, platform growth has been disappointing, attracting less than 3,000 people in its first month. Industry experts quoted by Securities Times attributed the fact to a lack of promotion: Most potential users were not aware of the product.
Baidu’s offer didn’t differ much from other mutual aid products. Signing up was free and it charged only a management fee of 8%. Alipay boasted last year to have reached around 100 million participants in a market that is set to triple by 2025.
When contacted by KrASIA, a Baidu spokesperson said that the company has no further comments in addition to the information provided in the announcement.
Mutual aid networks are based on the voluntary exchange of resources, skills, and services for the mutual improvement of its members. These networks can operate in a range of different fields, including food, housing, healthcare, and disaster relief.
In China, different tech companies and financial institutions have been active in establishing mutual aid networks that focus on healthcare. They can be seen as a crossover between crowdfunding and insurance. Participants of these platforms share the cost of medical treatments once a claim has been verified. For instance, an individual’s RMB 1000 (USD 143) medical bill would be reduced to merely RMB 1 (USD 0.14), when shared by all members of a 1000 person group in a mutual aid scheme.
By 2025, China’s online mutual aid industry is expected to reach 450 million users, or nearly 32% of the country’s population, three times the number of current users. An important reason for its huge potential is that the reimbursement rate for serious diseases under China’s public health care system is capped at 60%, leaving patients to pay the balance themselves, according to the state-run Xinhua News Agency. This makes mutual aid schemes an attractive alternative.