The case is about emerging Shenzhen-based power-bank rental start-up Laidian Technology Co. Ltd. (Laidian), which serves as a sharing platform for people to charge their mobile devices on the go. It was one of the first companies in China to cash in on the country’s latest sharing economy fad – the mobile charger rental business. Founded in 2014, Laidian’s business model is to set up fixed charging stations in public places that attract heavy foot traffic such as restaurants, shopping malls, train stations, and airports. For a small fee, a user can borrow a charger after scanning a QR code with his/her smartphone, and can return it later at any of the Laidian’s power bank rental stations. By 2018, Laidian has managed to expand into more than 280 cities nationwide and attract over 30 million registered users and hundreds of millions of service users. The start-up looks to steadily expand overseas amid growing domestic competition.
Eyeing a niche market, Laidian hopes to be the leader in China’s power bank rental sector going forward. But this journey is not likely to be without challenges. Though an intriguing idea, it is a still a risky business proposition, considering not only the low rental fees but also the risk of theft. Some analysts were concerned over the viability and sustainability of the business model of power bank rentals, fearing it may be just another fad. Also, with the fast developing technology and mobile phones with better battery capabilities being released, these business models of power bank rentals might die out in the foreseeable future. Moreover, growing competition, patent infringements by rivals, low profit margins, and concerns over breach of users’ privacy are some of the challenges Laidian could continue to face going forward.
As Laidian gears up to make headway in the Chinese power bank rental sector, analysts wondered: Can Power bank rentals become the next big thing in the sharing-economy business model or is it just a fad? Can Laidian emerge as China’s next unicorn born out of power banks?
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The case is structured to achieve the following teaching objectives:
Understand concepts like sharing economy, and collaborative consumption.
Analyze the business model of Laidian.
Examine the features which differentiate conventional businesses from sharing economy platforms.
Understand the reasons behind Laidian’s success in China and suggest ways by which Laidian can gain a competitive advantage going forward.
Identify the challenges faced by Laidian in the emerging power bank rentals sector in China and explore strategies that the company could adopt to sustain itself in this competitive market.