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China’s power bank sharing industry took a hit from COVID-19, but it’s not out of juice yet

China’s booming shared power bank industry had 150 million users in 2019, according to market research firm Trustdata.

Photo: Stock.tuchong.com

Renting power banks at restaurants or stores used to be part of Timothy Chen’s routine whenever he was out and found his iPhone running out of juice.

“I don’t want to carry a portable charger in my pocket every time I go out, especially when I can find a shared one almost everywhere and it costs only a few yuan each time,” the Shenzhen resident said.

However, Chen’s appetite for it is has waned since the coronavirus pandemic: “I’m not too concerned about the hygiene problem when I used a shared power bank [but] I simply don’t go out as much after the pandemic,” he said.

China’s booming shared power bank industry had 150 million users in 2019, according to market research firm Trustdata. Like other segments of the country’s sharing economy, which encompasses everything from home-sharing to bike-rentals, the industry took a hit during a months-long lockdown earlier this year due to the COVID-19 pandemic–but analysts say it is already starting to bounce back.

“The pandemic had a major impact on Laidian and the whole shared power bank industry,” said Liu Ying, general manager of branding and marketing at power bank sharing company Laidian, which has 180 million registered users and 2 million daily active users as of July. “Revenue dropped to a freezing point at the most difficult time during the lockdown.”

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However, analysts told the Post that they are expecting a speedy recovery for the portable charger rental industry as normal life and business in China have been resuming since March, even though cinemas did not reopen until late last month and the global travel industry is still suffering from lockdowns across the world.

“The power bank sharing industry is coming back on track as all walks of life normalise,” said Zhang Dingding, an internet industry commentator and former head of Beijing-based research firm Sootoo Institute. “Currently it may not be at the same level as last year or the year before, but the momentum of growth is very encouraging.”

Shenzhen-based start-ups Laidian and Jiedian both said their number of power bank sharing orders have resumed to pre-pandemic levels, with Jiedian saying that orders in some areas have even surpassed the number at the same time last year. Both companies declined to comment on the profitability of their businesses.

Hangzhou-based Xiaodian, which counts Chinese tech giant Tencent Holdings and venture capitalist Sequoia among its backers, is planning for an initial public offering as it started pre-listing tutoring last month, according to an announcement on the China Securities Regulatory Commission’s website.

Xiaodian did not immediately respond to a request for comment, but rival Jiedian said the planned IPO is testament that the capital market is recognising the value and mature business model of the power bank sharing industry.

“Xiaodian’s planned IPO is not an isolated event, and we will soon witness more moves by the capital markets in the industry,” a Jiedian representative said in a written reply to the Post.

Shanghai-based market research firm iResearch predicted in a report in March that the industry growth rate will slow to 17 per cent in 2020, after surging 140% to RMB 7.9 billion (USD 1.14 billion) in rental transactions the previous year. But it is expected to maintain between 50 to 80% growth in the upcoming years, with the fastest recovery predicted to be among customers in second tier cities in the country, according to the report.

Since vendors started offering shared power banks around 2017, a battle for market dominance quickly turned into a price war, knocking out many smaller players. As of last year, front-runner Jiedian accounted for 28.6% of the market, followed by Xiaodian at 27%, Shanghai-based Energy Monster at 25.1% and Laidian at 15.6%, according to a Trustdata report.

Meituan has re-entered the power bank business. Photo: Stock.tuchong.com

Food delivery giant Meituan Dianping also recently re-entered the industry–a move which, according to Laidian’s Liu, sends a positive signal about the industry’s potential.

“People are using mobile phones for more and more hours, and mobile phone charging needs are everywhere,” Meituan said in a statement released earlier this month, which added that “this demand has not been well met” so far.

The food delivery giant set up a new department dedicated to its shared power bank business in January, and has launched the service in over 200 cities across China, Meituan said in the statement, without disclosing user numbers.

“Meituan’s intention in entering the power bank industry is to provide better services to meet the needs of users,” it said, adding that it hopes to expand shared charging services from restaurants and hotels to a diverse range of locations including shopping malls, airports, railway stations and newsstands.

This is the Beijing-based company’s second attempt to enter the sector. It previously launched a similar service in mid-2017, but shut it down in less than three months saying there was a “lack of synergy with [its] other businesses”.

Despite the Hong Kong-listed firm’s reach as one of China’s biggest food delivery companies, Laidian and Jiedian both said they did not see Meituan’s entrance into the power bank sharing business as a threat.

“The entrance of Meituan is definitely positive for the industry as it will push the incumbents to move forward, and may also expand the possibilities of the industry,” said Liu from Laidian.

Jiedian also said it believed that the impact on major shared power bank players would be limited.

Meituan may have established its advantages in working with the restaurants, but the sector only covers around 30 per cent of use scenarios for power bank sharing, which are also in high demand in places like shops, transport hubs, schools, hospitals and more, Jiedian said in a statement.

“The power bank sharing industry is much broader than what Meituan covers,” it added.

This article was originally published by the South China Morning Post