TO­WARD A SHAR­ING SO­CI­ETY

China Daily (Canada) - - ANALYSIS - In syd­ney karl­wil­son@chi­nadai­lya­pac.com

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

AFP

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.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.