China has embraced the shared economy and flooded sharing startups with venture capital. A vivid example is ZHO.
In a country where free tissue and toilet paper are uncommon in public areas, the startup provides users a pack of tissue for free each day after scanning a QR code.
Within three years after its launch, ZHO has secured 5 million yuan in financing from angel investors.
The tissue-sharing startup was established in 2014 in Zhongshan, Guangdong province. It installed intelligent tissue sharing devices in public places such as snack shops and restaurants.
Drawing traffic through the service, the company aims to change customer behavior in China to kick off the social networking of machines.
According to reports, ZHO plans to install 3,000 devices in the Pearl River Delta region, targeting at least one device in shops every 50 meters. Each machine will offer 30 packs of tissue per day on average.
People can get a pack of tissue for free each day but they would have to pay for a second pack. With each pack of tissue costing about 50 cents, the margin on tissue sales is about 50 percent.
With a staff of 40, the company offers a one-stop service from hardware production to on-site installation for clients, with each tissue-sharing machine charging about 2,000 yuan.
ZHO has developed different types of machines. The wall-mounted mini machine can load at least 80 packs of tissue and the floor-standing machine can display posters and features with an LCD screen for ads besides providing tissue packs.
The company can profit from attracting ads on the packages of the tissue. It plans to recruit followers for clients’ official business accounts on social media such as WeChat.
ZHO has also launched partnerships with snack bars. For every pack of tissue sold by the machine, the snack bar would receive 10 cents.
The partnerships are expected to boost foot traffic and reduce the cost of the snack bar for providing tissue. This comes with extra income earned from ZHO.
This article appeared in the Hong Kong Economic Journal on September 14, 2017. Translation by Ben Ng as appearing at ejinsight.com.