Similar to capsule hotels in Japan, the sleeping capsules showed up in three office buildings in Shanghai and in buildings in several other cities. They are designed to offer white-collar workers a space to take a break, day or night.
The clampdown in Shanghai came after suspensions of the service in Beijing and Chengdu, Sichuan province.
"Sleeping capsules are usually in a narrow space, where injuries or even death can easily result if a fire breaks out," said Li Min, an engineer in the firefighting division of Pudong New Area who helped inspect capsules in the New Shanghai International Tower on Monday.
"Smoke and poison gases can gather faster in these spaces. Sitting or lying down on the bed in the capsule could result in a relatively slow response to an emergency," she said. "It contributes to the difficulty of a fire evacuation."
Shanghai police also said the service was suspended because it did not get permission from fire departments or a license to run a hotel.
The capsules, developed by Beijing tech company Xiangshui Space, are equipped with electrical accessories including a lamp, fan and power sockets. People can get disposable bedding free, including sheets, pillowcases and blankets. Earplugs are also available.
Anyone can pay for a capsule by scanning its QR code. The capsules in Shanghai offer 24-hour service at 10 yuan ($1.50) for every half-hour during peak hours (11 am to 2 pm) and 6 yuan per half-hour at other times. The upper limit is 58 yuan per day.
Xiangshui Space's website was out of service on Wednesday, citing "system upgrading".
CEO Dai Jiangong told Beijing News on Wednesday that the company was "recalling" its products for an upgrade at the request of authorities in different cities. He was also quoted as saying that the company was not penalized.
The capsules were introduced as the sharing economy has boomed in China through products such as bicycles, umbrellas, chargers, cars and even basketballs.
In the case of the sleeping capsules, many netizens expressed concerns about hygiene, not fire hazards.
"I don't think it would meet health standards if no one tidied it up after it was used," one netizen wrote.
Another wrote: "High quality management is the prerequisite for the sharing business."
Cao Chen contributed to this story.
CAN/CGSB-4.2 NO.27.7: Textile test methods for combustion resistance of mattresses