In the recent two years, China has witnessed a wave of "sharing economy", which has exerted a strong impact on the capital market and the people's lives. Within a short period of time, the emergence of bike-sharing in 2016 had effectively solved the problem of medium distance traveling, and the idea of "sharing" had amazed many people. Then, dozens of companies such as Mobike and OFO had sprung up, and bike-sharing had become a hot spot for capital chasing. Others such as umbrella-sharing, powerbank-sharing and co-working space mushroomed. As time goes by, now that Mobike is acquired by Meituan-Dianping, while OFO still faces uncertainty. As the tide has gone, there are huge piles of abandoned and broken bicycles, and billions worth of social wealth have reduced to ashes. According to researchers at Anbound, the capital-driven innovation farce is not just the failure of individual companies, it also resulted in the changes and problems in investment culture, business culture, social values, resource allocation, policy resource preference and other aspects that deserve serious reflection.

First of all, is innovation like bike-sharing the kind of innovation China wants? Under the guise of "sharing economy", bike-sharing is essentially a consumption model of "internet + lease". The innovation of this application-side consumption model is not a "hard" innovation, and there is no technical content. As Ma Huateng the Chinese business magnate said, this kind of application-side innovation seems to flourish, but actually it is a house of cards that can be demolished easily. The use of capital has its opportunity cost; every choice has a trade-off that sacrifice one thing to get something else. Therefore, China needs to have a good reflection on the strategic orientation of innovation. If the country's innovations are about application and consumption, and the Chinese entrepreneurs, investors are keen to make some "easy money from that, China's economy may fall into the trap of so-called "innovation".

Second, the disorderly expansion of capital is a huge waste of social wealth. According to statistics, as of February this year, 77 bike-sharing enterprises in China had injected 23 million bicycles in total. According to incomplete statistics, the fund raised by bike-sharing project has reached RMB 30 billion, of which nearly 80% went to OFO and Mobike, the two giants in the industry. However, due to poor management and the failures of bike-sharing enterprises one after another, a large number of bicycles have become garbage, many cities have seen the appearance of "bicycle cemeteries", resulting in a large amount of waste of social wealth. In addition, the impact of the bursting of the bike-sharing bubble on the upstream manufacturing industry is still spreading. During the boom of bike-sharing industry, the upstream manufacturing industry expanded production lines, recruited workers and enjoyed a temporary boom. Now, due to the lack of orders, many factories have closed down or struggle to survive. The pursuit of capital has formed the illusion of industrial expansion that promotes the manufacturing industry to "overeat", which would have a great negative effect on the economy.

Third, China must reflect on the investment concept of the sharing economy. Anbound has repeatedly warned that the bike-sharing business model has some major problems: it fails to locate a viable business model, lacks of clear profit outlook, commercially unsustainable, and that using innovative concepts to raise money is actually an "economic scam". The main reason that sharing economy can be developed lies in the capital chase after, where the bubble became bigger, then it tried to be sustained through listing or getting purchased by the next investor. What is even worse is that many investors have a problem with their motivation to enter the market; they are cheating on the deposit under the guise of bike-sharing, which is actually a Ponzi scheme. The fact that an immature business model is so popular and chased after by capital is actually an indication that the capital market is keen on speculation, and this is immature and unhealthy.

The fourth is solving the problem of deposit in the bike-sharing industry. According to the statistic of iiMedia Research, as of November 2017, the size of the deposit in China's bike-sharing market has exceeded RMB 12 billion. So, where did the deposit of bike-sharing come from and where will it eventually go? There is no clear regulation at present, and the custodian banks are even more unaware of this. One of the consequences of unsupervised is the widespread of misappropriations. Now that the money has burned out, the bike-sharing company is unable to continue its operation, but how should its huge debt be repaid? On the other hand, because the deposit is from scattered individual user groups, it would take greater cost for an individual user to claim back the deposit, therefore, there are only few people follow-up and try to claim back their deposit form the bike-sharing enterprises. In addition, the nature of the deposit should be the credit debt of the enterprise, if bike-sharing enterprise does not return the deposit, its nature should be considered as the fraud and breach of contract, it must be brought to the justice and cannot be ignored. To grasp this problem is also to grasp the fault tolerance boundary of China's innovation; if it is vaguely responded, it is actually harmful to the market rules.

Finally, the Chinese government should have a clear boundary in promoting the sharing economy. The government is undoubtedly right to encourage the innovation, but what it should do is to encourage the innovation culture of the society as a whole, shape the innovation environment, build a public innovation platform, and vigorously develop an education system that encourages innovation. However, it should not intervene too much in the areas of industrial development, project investment and enterprise development; if the government goes too far in the market, it is actually another intervention in the market. To a certain extent, the intervention would form the impression that "the government is endorsing enterprises" in the market, this kind of implicit credit enhancement will plays a role in facilitating the market to be overheated and enlarge the leverage ratio to the danger level.

The explosive development of sharing economy should actually prompt us to think about how to innovate. Huawei's founder, Ren Zhengfei has analyzed the order of innovation in the past.

"First, we must emphasize the industrial automation. After industrial automation, it is possible to evolve into informationization and thereafter, the intellectualization. China is moving toward the stage of informationization, I think we still need to work hard."

"China's industries have not yet to be fully automated, and there are still many industries even yet to be semi-automated. At this time, we proposed a program similar to industry 4.0, which is ahead of social reality and eventually it will fail in implementation. So, our country should step up the industrial automation."

This concept of innovation which emphasizes the logic and step by step of implementation is obviously different from the innovation concept of taking opportunity of tight corners to make swift progress.

Final analysis conclusion:

Innovation is an indispensable factor that spurs economic growth in the long term, therefore the government should vigorously encourage innovation. However, government should have a clear boundary in promoting the innovation. In terms of strategic planning, the government should grasp the correct direction; in terms of regulatory policies, the government should establish a clear boundary and rules of the game; in terms of the market development, government should leave it to the market and let enterprises, financial institutions, consumers and intermediaries to develop independently. The wave of the sharing economy is not over yet, and we cannot rule out the possibility that the success enterprises may be born in it, but the failed examples are all too common. Hence, China really needs to reflect on the current issues of innovation like the sharing economy today.