TOWARD A SHARING SOCIETY
At any given time of the day, millions of people around the world go online to rent, borrow, trade or barter goods and services. This is what economists call the sharing economy.
Since the likes of ride-sharing service Uber and home-rental firm Airbnb came on the scene in recent years, the sharing economy has grown exponentially.
It is changing the way we consume goods, travel, commute and work, among many other activities.
Sharing platforms are springing up daily across Asia to cover just about everything from handbags and furniture to cars and homes.
In 2013, the South Korean capital launched the Sharing City Seoul initiative and is working in partnership with non-governmental agencies and private companies to make sharing an integral part of its economy.
Some standout examples of companies operating in Seoul’s sharing economy are: Kiple, a children’s clothing exchange; Socar, a car-sharing service; Kozaza, a home-sharing site for traditional Korean houses; and Open Closet, a suit rental platform.
Several of these businesses have seen 100 percent growth since the launch of the initiative.
In China, the sharing economy was said to be worth about $299 billion last year and is expected to grow at an annual rate of 40 percent over the next five years, according to a report from the National Information Center, a Chinese government think tank.
Released earlier this year, the report said that China’s sharing economy is expected to be worth 10 percent of GDP by 2020.
More than 50 million people work in the country’s sharing economy, which is used by around 500 million consumers.
Across the region, however, this emerging business model has also opened the door to a gray area for governments regarding taxation and regulation.
One area it will have a dramatic impact on is the labor market, where a full-time job is becoming a thing of the past, and more and more workers are freelancing or going part time.
This creates a labor pool where employers can pick and choose people on a part-time or project-byproject basis. At the same time, it poses myriad problems, especially for workers when it comes to pricing their services.
“This will be one of the big challenges going forward,” said Greg Unsworth, digital business leader with professional services firm PwC Singapore.
“How can you guarantee a price for work done?”
Speaking to China Daily, Unsworth noted that people are opting out of full-time work to seek more flexible lifestyles.
“These are people who can pick and choose part-time work. We are seeing this freelance idea popping up in many careers, including journalism.”
He said what one is paid will be fair the big challenge as the supply of workers increases.
“There will be a rebalancing and there will be significant disruption in the labor market.”
Elison Lim, associate professor of marketing and international business at Nanyang Business School in Singapore, said there are three things worth noting about the sharing economy.
“Consumers can make money from idle resources; it contributes toward curbing overconsumption, and it helps to conserve environmental resources,” she said.
In its purest form, Lim said, a sharing economy refers to a peer-topeer sharing behavior where people freely avail their resources without too much of a focus on profit.
“While such altruistic sharing works for a small group of people in a tightly knitted community, most consumers are much less inclined to do so for strangers they hardly know.
“Yet a sharing economy has its greatest potential when there is a large pool of people from both the demand and supply side of the equation — such as in online communities.”
Lim said today’s sharing economy is facilitated by efficient online platforms and marketplaces such as eBay, Airbnb and Uber.
“Its growth is especially prominent in places with high online reach — such as major cities that are densely populated and have high Internet penetration rates like London, New York, Hong Kong and Singapore.”
While the purest form of the sharing economy may only happen at the peer-to-peer level, the term “sharing economy” today also includes business-to-consumer transactions, Lim said.
“In this sense, another term, ‘collaborative economy’, which has been increasingly used interchangeably with ‘sharing economy’, may be more appropriate as it is more inclusive and broad.”
A report by PwC projected that the top five sharing economy sectors — travel, car sharing, finance, staffing, and music and video streaming — have the potential to increase global revenues from roughly $15 billion today to around $335 billion by 2025.
According to a survey by market research firm Nielsen, 78 percent of Asia-Pacific consumers are willing to share or rent their personal resources — 10 percent above the global average.
Out of the 60 countries surveyed, those reporting the highest response rates to utilize products or services from others in a share community include: China with 94 percent; Indonesia, 87 percent; the Philippines, 85 percent; and Thailand, 84 percent.
While the internet still has a limited reach in many parts of the world, Nielsen said the comparatively high willingness of online consumers in developing regions to participate in share communities demonstrates how the “Web can quickly become part of the culture”.
“Online consumers in developing markets often represent a younger and more affluent demographic than the general population, which can contribute to greater eagerness and enthusiasm,” Nielsen said.
And it is young people who are most attuned to the growing sharing economy, said Gervasius Samosir, manager for Indonesia with the marketing strategy consulting firm Solidiance.
The millennial generation — broadly defined as those born between 1980 and 2000 — “does not want to own the assets but rather wants the ‘access’ to the assets, whenever and wherever”, he told China Daily.
Nanyang Business School’s Lim noted that consumer behavior must change for the sharing economy to fully take off — away from the need to own and toward sharing as a smarter and more environmentally responsible form of consumption.
Unsworth from PwC Singapore pointed out that many Asian online platforms have used existing companies like Uber and Airbnb as models for more tailored local versions.
“People will look at a business model that works well elsewhere and adapt it to the local environment.”
He cited Grab, formerly known as Grabtaxi, which adapted the Uber model. Grab is a Singapore-based ride-hailing platform which operates in countries throughout Southeast Asia.
“It started out as a taxi service but dropped taxi from the name as it branched out into other services,” Unsworth said.
“In Jakarta you are seeing a lot of motorbike services popping up. They can guarantee to take you from your home to the office faster than a taxi, and if you have seen Jakarta’s traffic jams you will know what I mean.”
Unsworth said that a major challenge facing governments, not only in Asia but globally, is regulation. How should the sharing economy be monitored and controlled, and how should it be taxed?
According to The Economist, people who rent out rooms should pay tax “but they should not be regulated like a Ritz-Carlton hotel”.
“This emerging model is now big and disruptive enough for regulators and companies to have woken up to it. That is a sign of its immense potential,” the publication added.
These are issues that governments must deal with going forward, Unsworth said.
A recent report by the National Australia Bank, How Australian business views the sharing economy, said the “disruptive impact” of the sharing economy over the past 12 months was being felt in businesses involved in recreation, personal services, hospitality and retail.
The transport, storage and utilities sectors will see the sharing economy affecting their businesses over the next 12 months, the report said.
“We are entering uncharted waters in many of these areas,” said Unsworth.
“There are a lot of gray areas. For the sharing economy to succeed, it will need to be built on trust — the same way that Uber and Airbnb have become trusted platforms.”
digital business leader with professional services firm PwC Singapore
People use mobile phones in front of a 4G advertisement inside a shopping mall in Bangkok. High internet penetration is one of the factors driving the emergence of a sharing economy, especially in densely populated cities in the region.