“Sharing economy” is becoming popular around the world in recent years. This emerging model advocates sharing all sorts of resources ― houses, cars, personal skills and manpower, to name but a few. How can we grasp the basics to ride this sharing wave?
Sharing economy means generating income by sharing idle resources with others through online platforms. Examples are short-lease accommodation platform Airbnb, and Uber the hired car service deploying part-time drivers. Airbnb, for instance, currently offers leased accommodation in 30,000 cities around the world. According to multinational professional accounting and auditing services network PricewaterhouseCoopers, by 2025 sharing economy will generate USD335 billion of wealth globally. It will definitely go from strength to strength.
Sharing economy booming worldwide
This concept is catching on fast in the Mainland and Hong Kong. More well-known Mainland examples are car hire platforms START and Didi Chuxing, as well as WiFi Master Key, an app that helps users connect to free WiFi hotspots wherever they are. And there are the more recent bike sharing craze, which revolutionizes bike hire with GPS and an “Internet+” operation model that features non-fixed-post pickup and return. Many young entrepreneurs in Hong Kong are jumping on the bandwagon. Local success stories include P2P item rental platform Gaifong, car sharing platform Carshare, and travel and dating website Sam the Local.
Sustainability-based economic concept
Stephen Wong, Adjunct Lecturer of the Master of Social Science in Global Political Economy at the Chinese University of Hong Kong, points out that sharing economy is not a fresh idea, but a concept reborn through innovative technology. “In the past, when we ran out of soy sauce we would borrow from the neighbours. This idea is essentially the same. Sharing economy today has two key points. Firstly, it is a business model focused not only on making profit but also sustainability. Secondly, idle assets are put to good use by dint of technology to strengthen social capital.”
As a matter of fact, sharing economy offers benefits to businesses, society and the public. Wong cites the example of renting a room, “By renting out an idle room, the provider is reusing unwanted resources. On the other hand, the tenant can have a choice outside hotel accommodation and enjoy the experience of staying at a B&B.”
“Sharing platforms also reflect changing needs of the market. Businesses can take a cue from the concept of sharing economy and develop new operation models. On the community level, sharing economy can enhance social capital and at the same time build closer interpersonal connections to strengthen social trust.”
Legislation must keep abreast of development
Sharing platforms come in many forms and they often involve issues under different laws: catering issues related to food factory licenses, housing issues related to guesthouse licenses and the Fire Services Ordinance, and car issues related to the Road Traffic Ordinance. As sharing economy develops quickly, business operators will feel constrained and worried if the legal framework lags behind.
Wong describes the problems faced by sharing economy in Hong Kong as new wine in an old bottle. “Sharing economy inevitably involves legal issues so laws and provisions must move with the times. Discussions should be held by various stakeholders and government departments to reach social consensus. Sharing economy is not a zero-sum game.” He stresses that collaboration between the government, the business sector and the public is vital. He advises against an ostrich policy on the government’s part, “The government should take the lead and set up a focus group to make necessary legislation amendments.”
Perhaps Hong Kong can learn from examples of other countries. Park Won-soon, mayor of Seoul, launched the “Sharing City Seoul” initiative in 2012. A sharing committee was formed by stakeholder groups to draft laws and regulations that support future development. Hong Kong can do likewise to opportunely ensure that our sharing economy catches up with the rest of the world.
O2O sharing economy
In this new wave of sharing economy, many startups want a piece of the pie. Phoenix Wan, Founder of Youth Entrepreneur Warrior, is one of them. Having founded a number of O2O sharing economy platforms ― including websites like Hong Kong MC, HK Hair Salon, Hong Kong Photographer, Hong Kong Designer and HK Writer ― he is one of Hong Kong’s pioneers in sharing platforms.
Wan set up Hong Kong MC in 2015 as the first trial platform. “I noticed many event organizers had trouble finding MCs, yet friends who were professional MCs said it was hard to land jobs. So I decided to experiment with a sharing platform where the public can search information and reviews on MCs and then book them for events online. After operating for a while, I found the response was quite good, and the idea was supported by both the profession and the public.” Wan says 250 MCs are now registered with Hong Kong MC and there have been 2,800 successful transactions to date. Business has now expanded to Taiwan.
Highly transparent and no intermediaries
Wan names five unique features of his sharing platforms: 1. No intermediaries. Those requiring service and the service providers can match up and communicate online directly, and they can enjoy other value-added services offered by the platform by paying only the platform service fee. 2. Industry resources that have been overlooked are put to productive use again. 3. Fair and equitable, highly transparent and neutral. 4. Users can write reviews on the performance of service providers, who will have one chance to respond. The administrator will telephone users who have left messages to verify authenticity. 5. To avoid concerns about conflicts of interest, the platform operator must not be a member of the industry.
Operating platforms on the Internet is a good way to lower cost and broaden the target customer base. Wan said, “The cyber world has no geographical borders. You are not limited to local customers, but are open to customers from around the world too. People who need service can also identify their ideal service providers anytime and anywhere.”
Finding balance in a tug-of-war between old and new
Platforms operated by Wan have not been involved in legal or regulatory issues to date. This is because he has given the matter due consideration in advance. He says Hong Kong has clearly defined ordinances, and platform starters should read applicable provisions and familiarize themselves with the associated regulatory framework before going into business. Being well-prepared, they can avoid “skirting” during operation.
Sharing economy inevitably poses competition to traditional economic models. However, Wan thinks we can strike a balance in this tug-of-war. “We were also worried that these platforms would cause intermediaries to lose business. Instead, some intermediaries later said the platforms allowed them to give customers a bigger choice of service providers and thus greatly increased their chance of getting customers.” Consumers have a wider choice and the industry is further invigorated. A classic case of killing two birds with one stone.
