Asia, and the many cultures that make up the continent are, broadly speaking – places of cultural contrast. I’ve traveled to Asia for both work and leisure many, many times over my 18+ yr marketing career and have always appreciated and enjoyed the beauty of its contrasts – vibrant and full of energy while at the same time meditative with a more Long-Term Orientation (LTO).
Years ago I remember having coffee with Dr. Dae Ryun Chang, a professor at Yonsei University and leading expert on marketing, branding and business-related issues in Asia. We talked about marketing in Asia and he described to me a phenomenon that he called the “We-Me” Culture in South Korean consumers. His elegantly written piece can be found HERE.
Now, fast-forward years later, as I read through the article below – an excellent overview of the Share Economy in Asia, written by Wendy Tsai – I couldn’t help but remember my conversation with Dr. Chang.
The juxtaposition, dichotomy and cultural contrasts that imbue the region(s), may wind up being latent drivers that help propel the share economy throughout Asia. Where consumers are producers – and the “we” are also “me”.
by Wendy Tsai
Traditionally the world’s manufacturing hub, Asia is transforming into a group of vibrant, diverse and interconnected markets in the Internet era and is in prime position to benefit from the sharing economy, which is disrupting industries ranging from logistics to hospitality and employment and is expected to grow to US$335 billion in revenue by 2025 from US$15 billion today, according to PwC.
Countries in Asia lead the globe in Internet/mobile connectivity and connection speeds. With comparatively better infrastructure and quality of offered services to facilitate a higher participation rate, joining the digital platform of a sharing economy is inevitable.
According to Akamai Technologies’ Second Quarter 2014 State of the Internet Report, South Korea had a high broadband (>10 Mbps) adoption rate of 78%, the highest of all countries. Switzerland (56%) and Japan (54%) came in second and third, respectively. The global average rate was 23%.
In terms of average connection speed, South Korea kept its first place globally and regionally at 24.6 Mbps up by 4% quarterly and 84% year on year, followed by Hong Kong (15.7 Mbps). Japan and Switzerland tied for third with average connection speed of 14.9 Mbps. Singapore (10.4 Mbps) and Taiwan (9.5 Mbps) ranked fourth and fifth respectively in the Asia Pacific region.
While the U.S. and European countries seems to have had a head start in the sharing economy space there are signs that it is slowly taking root in Asia. BnB Hero, a South Korean version of Airbnb launched in 2012, now boasts 5,000 listed properties on its site and has between 35,000-40,000 visitors on average per month. According to Chief Marketing Office, Park Yong Soon, the company is working to form a private accommodation belt across north Asian countries, including Japan and China. Singapore, Hong Kong and Taiwan are top three countries in the site’s user list.
Singapore, one of Asia’s major tech havens and business hubs, has also shown signs of a burgeoning startup ecosystem. In June – just two years after its launch – iCarsClub, a Singapore-based peer-to-peer car rental platform, raised US$10 million from multiple investors in China and also expanded its China-based car rental marketplace PPZuche to Guangzhou and Shanghai, after testing it out in Beijing in 2013.
iCarsClub is one of the six startups (along with Rent Tycoons, PandaBed, BlockPooling, Leendy and Waste Is Not Waste) that have come together to launch the first Sharing Economy Association in Singapore, which will spread awareness about the sharing economy through networking sessions for businesses, consultation dialogues with government agencies and public talks to help startups overcome regulatory challenges.
All across Asia there are a plethora of startups joining the sharing economy scene. In China there is Xiaozhu.com, which rents out homes for short periods. Triip.me allows ordinary Vietnamese locals to offer amateur tour guide services and tourism packages through their website and mobile app. Malaysia-based Plate Culture offers home-cooked meals for visitors who want to experience a taste of dining at a local’s dinner table. The list goes on.
While local innovation is still taking root, successful global brands are also eyeing Asia as a collection of densely populated and lucrative markets. Airbnb and Uber have already launched their services in major cities across North and Southeast Asia. In Hong Kong even though the average ride with an Uber car is 1.5 to 2 times more expensive than a regular cab, making it a premium alternative taxi service, demand is strong. Uber has said that Hong Kong has been its fastest growing market outside of the U.S.
Because the sharing economy sector is so new, corporations and regulatory authorities around the world are still grappling with the balance between embracing new technology and safeguarding the interests of traditional businesses as well as the consumers. This is especially tricky in a region as diverse as Asia.
After months of heated debate among rental platforms, hosts and lawmakers, city leaders in San Francisco recently voted to regulate and allow short-term rentals in the city facilitated by companies like Airbnb. But such services are still facing legal challenges in other U.S. cities and all over the world.
Earlier this year, two homeowners in Singapore had their flats confiscated by the Housing and Development Board because they had violated public-housing rules by renting their units to tourists. The owners were evicted from their homes. In Singapore, where the government maintains tight control over how land space is used in the city-state, short-term rental (less than six months) of private or public housing are against the law.
For a foreign company operating in the region, apart from competing with homegrown startups, other subtle nuances are required to ensure success. According to the CEO, Uber is now operating in five Chinese cities and is successful because they hired the “sons and daughters” of China, which lends credibility to the service. Uber competes with Alibaba-backed Kuaidi and Tencent-backed Didi Taxi in the Chinese market.
In addition to regulations, local and foreign companies alike need to address concerns over insurance for contractors, consumer safety and how they would deal with liabilities in the event of lawsuits – highlighted by a recent incident in which an Uber rider landed in the hospital after his driver allegedly smashed in his face with a hammer after a dispute over the route.
Uber disagrees with liability claims saying that it is a marketplace and not an actual transport provider. The company also cited its terms of service saying that it cannot be held responsible for liabilities and damages caused by the third party transportation provider, but Uber is still legally vulnerable if attorneys can prove negligent hiring or training. Taxi companies were quick to point out that had the incident occurred in a city-regulated taxi, the taxi company would have been responsible for the driver’s action.
With technology so readily available today, it plays a dual role as both an enabler and disruptor. Peer-to-peer communication online will continue to dominate consumers’ purchase decisions on and offline in the future. Companies should be embracing peer-driven consumption, rather than ignoring or resisting them. They should be doing an audit of their assets and look for ways they can participate in the sharing economy value chain. Ultimately businesses that embrace changes in the digital era and leverage it to expand and develop new markets and improve products and services will be the ones that succeed.
More importantly, government support is crucial to take advantage of the growing sharing economy phenomenon. Laws need to change to keep up with new technology. In the UK, for example, the government brought insurance leaders together to work out how they can better serve sharing economy business models. Officials also announced plans to remove laws controlling short-term rentals, opening up the door for short-term P2P accommodation sites to expand. South Korea, with the support of the government who in 2012 declared the capital Seoul as the “Sharing City” of the future, is perhaps among the most progressive Asian nation in the sharing economy space. But more countries need to follow suit in order for an effective sharing economy to really gain traction.