Shar­ing it out on a level play­ing field

Ex­perts call for shar­ing econ­omy to be reg­u­lated to help shore up in­dus­try and beat vi­o­la­tions

China Daily (Hong Kong) - - BUSINESS - By OSWALD CHAN in Hong Kong oswald@chi­nadai­lyhk.com

Hong Kong is not dead set against the shar­ing econ­omy de­spite a re­cent back­lash against some prom­i­nent play­ers, but would like to see a more de­cent con­test among busi­ness stake­hold­ers, ac­cord­ing to in­dus­try pun­dits.

Over­haul­ing reg­u­la­tions, they say, is one vi­able, im­me­di­ate op­tion for the Hong Kong gov­ern­ment to ac­com­mo­date the new busi­ness model that has seen ex­po­nen­tial growth world­wide in the past few years in tan­dem with the tech­no­log­i­cal boom.

Lead­ing play­ers in the in­dus­try have ei­ther hit the buf­fers or run afoul of the law in the re­gion af­ter hav­ing drawn the ire of lo­cal au­thor­i­ties and whip­ping up pub­lic dis­con­tent.

Global ride-shar­ing gi­ant Uber Tech­nolo­gies was forced to put the brakes on its ser­vices in Ma­cao last month af­ter a fu­tile two-year bat­tle with the city ’s gov­ern­ment over reg­u­la­tions. It was the sec­ond time the com­pany had ter­mi­nated its oper­a­tions there. In Au­gust last year, Uber, which de­buted in the gam­ing hub in late 2015, halted ser­vices af­ter some 300 driv­ers were handed fines to­tal­ing more than 10 mil­lion pat­a­cas ($1.24 mil­lion) for vi­o­lat­ing lo­cal laws.

Uber had also pulled out of Tai­wan in 2016 and sold its busi­ness on the Chinese main­land to its ri­val Didi Chux­ing last year. In ad­di­tion, au­thor­i­ties in Ja­pan, South Korea and Thai­land are clamp­ing down on pri­vate car-hail­ing ac­tiv­i­ties.

The San Fran­cisco-based tech ti­tan’s bumpy jour­ney in Ma­cao also re­flects a sim­i­larly tough cli­mate in Hong Kong, where 22 Uber driv­ers were de­tained in an un­der­cover police op­er­a­tion in May. They were charged with con­tra­ven­ing the Road Traf­fic Or­di­nance, which pro­hibits car­ry­ing pas­sen­gers for hire or re­ward with­out a per­mit and third-party risk in­sur­ance.

Uber had ar­gued that a ride-hail­ing in­sur­ance pol­icy of HK$100 mil­lion was in place for each trip for both third-par­ties and rid­ers, and was in com­pli­ance with Hong Kong’s laws, in­clud­ing in­sur- ance reg­u­la­tions.

A Hong Kong court con­vic ted five Uber driv­ers in March this year on charges of con­duct­ing il­le­gal car-hail­ing ser­vices. They were fined HK$10,000 each and had their driv­ing licenses re­voked for one year, but the penal­ties were sus­pended on ap­peal by the driv­ers.

Ac­cord­ing to a Reuters re­port, more than 1 mil­lion of Hong Kong’s 7.3 mil­lion res­i­dents have down­loaded the Uber app so far, while tens of thou­sands have reg­is­tered as driv­ers.

Bike-hir­ing app op­er­a­tor Gobee.bike also had its fair share of prob­lems when it de­buted in the SAR in April, amid mar­ket con­cern over van­dal­ism, theft of bi­cy­cles, leak­age of per­sonal data, as well as com­plaints about un­fair com­pe­ti­tion.

Gobee.bike, which has reg­is­tered 61,000 down­loads to date, cur­rently de­ploys 3,500 smart bikes across the New Ter­ri­to­ries, cov­er­ing Sha Tin, Tai Wai, Tai Po, Ma On Shan, Tung Chung, She­ung Shui, Fan­ling, Tuen Mun, Tin Sui Wai, Tse­ung Kwan O and Yuen Long.

Bike-rental shops in the dis­tricts are up in arms against the lo­cally based bike-shar­ing plat­form, say­ing they’ve been forced onto an un­level play­ing field, as Gobee.bike is prof­it­ing by tak­ing ad­van­tage of free bike-park­ing spa­ces, while bike-rental shops have to pay rent for their busi­nesses.

In ad­di­tion, the bike-hir­ing app may be sus­cep­ti­ble to breach­ing the road traf­fic park­ing rules, un­der which any per­son who parks a ve­hi­cle in a park­ing space for a con­tin­u­ous pe­riod of more than 24 hours com­mits an of­fence.

Both Uber Hong Kong and Gobee.bike de­clined re­quests by China Daily for in­ter­views.

In such a sce­nario, it’s only proper that laws be en­acted to en­sure that the shar­ing econ­omy com­pa­nies find its niche in the mar­ket.

“The Uber and Gobee.bike cases show that the gov­ern­ment has no pol­icy coordination and no plan to make leg­isla­tive re­vi­sions to ac­com­mo­date shar­ing econ­omy com­pa­nies af­ter hav­ing lured these en­ter­prises to Hong Kong,” says law­maker Charles Mok Nai-kwong, who rep­re­sents the in­for­ma­tion tech­nol­ogy sec­tor in the Leg­isla­tive Coun­cil.

In­vestHK — the Hong Kong g o v e r n m e n t ’s i n v e s t m e n t agency — sees Uber as one of its suc­cess sto­ries, but the en­dorse­ment on its web­site was re­moved fol­low­ing the Uber driv­ers con­tro­versy.

“The gov­ern­ment should carr y out pub­lic con­sul­ta­tions on whether to reg­u­late Uber’s oper­a­tions here. Any con­sul­ta­tion should clearly de­lin­eate what kind of reg­u­la­tory re­stric­tions should be en­forced. This should clear the air over whether the com­pany’s busi­ness is le­gal or not,” said Mok.

Se­cre tar y for In­no­va­tion a n d Te c h n o l o g y N i c h o l a s Yang Wei-hsi­ung warned in June that “any­one op­er­at­ing il­le­gal busi­nesses in the name of shar­ing econ­omy is un­ac­cept­able”.

The in­tri­cate is­sue is that shar­ing econ­omy apps threaten to se­ri­ously jeop­ar­dize the vested eco­nomic in­ter­ests of well en­trenched play­ers.

In Uber’s case, the grow­ing pop­u­lar­ity of its ser­vice could hurt the vested eco­nomic in­ter­ests of Hong Kong’s oligopolis­tic taxi li­cense own­ers. Cur­rently, a lo­cal taxi li­cense can fetch up to HK$7 mil­lion.

“The gov­ern­ment should con­duct con­sul­ta­tions involving rel­e­vant de­part­ments, es­tab­lished busi­ness lead­ers and shar­ing econ­omy stake­hold­ers on re­vis­ing ex­ist­ing reg­u­la­tions to help ac­com­mo­date the new shar­ing econ­omy busi­ness model,” said Wil­son Chow, TMT (telecom­mu­ni­ca­tions, me­dia and tech­nol­ogy) leader at PwC (Price­wa­ter­house­Coop­ers).

As the num­ber of shar­ing

As the num­ber of shar­ing econ­omy play­ers es­ca­lates, es­tab­lished play­ers should also strive to stay com­pet­i­tive and im­prove their ser­vices by form­ing al­liances to cre­ate a big­ger mar­ket share.”

Wil­son Chow, TMT (telecom­mu­ni­ca­tions, me­dia and tech­nol­ogy) leader at PwC

econ­omy play­ers es­ca­lates, es­tab­lished play­ers should also strive to stay com­pet­i­tive and im­prove their ser vices by form­ing al­liances to cre­ate a big­ger mar­ket share. For in­stance, lo­cal taxi driv­ers can up­grade their ser­vices by in­tro­duc­ing pre-ap­point­ment or door-to-door de­liv­ery ser­vices, or im­prov­ing the in­dus­try’s im­age, Chow sug­gested.

But, he stressed that the law­suits meted out against Uber driv­ers and those sus­pected of van­dal­iz­ing or steal­ing Gobee.bike ve­hi­cles do not mean that Hong Kong is turning its back on the shar­ing econ­omy.

He’s san­guine about the in­dus­try’s fu­ture prospects in Hong Kong which boasts one of the world’s highest in­ter­net and smart­phone pen­e­tra­tion rates, with peo­ple here very re­cep­tive to the global trend of the new busi­ness model.

Re­gard­ing the con­flicts be tween data pri­vac y and the shar­ing econ­omy, Chow urged the gov­ern­ment to re­quire in­dustr y op­er­a­tors to set up in­ter­nal con­trol systems on mon­i­tor­ing the re­lease of in­for­ma­tion, manda­tory en­cryp­tion to pre­vent in­for­ma­tion be­ing ex­posed to un­nec­es­sary par­ties, and pro­vide third-party as­sur­ances on the va­lid­ity of in­ter­nal con­trol systems.

JUSTIN CHIN / BLOOMBERG

Ap­pli­cants turn up at one of Uber’s of­fices dur­ing a driver re­cruit­ment ex­er­cise in Hong Kong. Ac­cord­ing to a Reuters re­port, more than 1 mil­lion of Hong Kong’s 7.3 mil­lion res­i­dents have down­loaded the Uber app so far, while tens of thou­sands have reg­is­tered as driv­ers.

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