Laidian Technology Co., Ltd.: Can the Power Bank Rental Start-up Recharge China's Sharing Economy?
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Case Code: BSTR579 Case Length: 13 Pages Period: 2014-2018 Pub Date: 2019 Teaching Note: Available |
Price: Rs.400 Organization: Laidian Technology Co., Ltd Industry: Power Bank Rental Countries: China Themes: Collaborative Consumption, Sharing Economy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Getting Started
The idea of coming up with a business of shared-charging came to Yuan when he found that the e-commerce leader in China, Alibaba, had sold more than 2 million power banks in just 24 hours during an online shopping bonanza on November 11, 2013. Considering the fact that there was a huge demand for power banks, Yuan and his partners met on the eve of Christmas in 2013 and explored the possibility of a shared and rented charger business. After brainstorming for hours, Yuan decided to establish a start-up. In early 2014, Laidian was established, the first of its kind, engaged in the research and development of smart mobile charging products integrated with high-end intelligent hardware and software...
Business Model
Laidian allowed users to rent portable power banks that they could take away and return at designated places. These charging spots were targeted at transportation hubs, large commercial complexes, restaurants, entertainment businesses, tourist spots, and domestic and international exhibitions, from where users could rent power banks after scanning a QR code with their smartphone. This facility of shared and rented chargers was available at a deposit of 100 yuan (US$15), and a borrowing cost of 1 yuan per hour. However, users who had reached 600 marks of Alipay credit were exempted from paying the deposit amount. All users were required to purchase the Laidian data wire, each available at 10 yuan...
Growth and Expansion
Laidian attracted many customers by offering rented power banks at an affordable price. Between 2014 and 2017, its 3,000 charging stations were visited more than 100 million times by consumers. By September 2018, the company had covered more than 280 cities in China, serving over 100 million customers. In early 2017, Laidian secured US$20 million in Series A funding – the highest in the nascent sector – from investors such as SIG Asia Investments LLLP, Redpoint Ventures China Fund, and Unity Ventures. In March 2017, three major Chinese shared charger providers, Laidian, Jiedian, and Xiaodian, received a total investment of 1 billion yuan...
Global Ambitions
Considering the increasing competition in the domestic market, Laidian was steadily moving to expand overseas businesses in countries like the US, Canada, etc. “We will ramp up efforts to enlarge our overseas business in more countries globally, including the United States, Canada, Japan, South Korea and Vietnam, as well as increase our international patents,” said Yun. By October 2017, Laidian had a presence in eight countries – Thailand, Japan, France, Indonesia, Canada, Australia, New Zealand, and the US. In the Indonesian market, Laidian came up with an app ‘Power On The Go’ which users had to download to rent a power bank...
Challenges
Laidian was battling numerous other issues in its home country as well as in international markets. Some analysts pointed out that the power rental business did not really offer much profit, and questioned the sustainability of such businesses in the long term. For many, the business model of shared-chargers remained unclear. As power banks had become more affordable and portable, the whole selling point of shared-charger services depended on the frequency of people not carrying their own mobile chargers...
The Road Ahead
With the growing popularity of mobile games and live-streaming videos in China, there would be an increase in demand for rental smartphone chargers as more consumers would need to recharge their devices, opined industry observers. By 2019, about 246 million consumers were expected to use battery sharing services, up from 104 million users in 2017. According to iResearch, the market value of China’s power bank sharing sector reached about 100 million yuan in 2017, and was projected to hit 330 million yuan in 2020...
Exhibits
Exhibit IA: Sharing Economy Revenues in China, 2012-2018
Exhibit IB: Sharing Innovation and Imitation in China
Exhibit II: Number of smartphone users in China from 2013 to 2022 (in millions)
Exhibit III: Funding
Exhibit IV: Awards
Exhibit V: Awards
Exhibit VI: Funding received by Top- 4 shared-charger providers (from February to April, 2017)
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