Embracing Sharing Economy – What is Missing?

Disclaimer: Warwick ASEAN Conference would like to clarify that all opinions expressed in this article are the authors’ and editors’ own.

BY WING YAN HUI

In recent years, the ‘sharing economy’ model has grown across the globe, gradually becoming an essential part of our everyday life. It has never been easier to use others’ idle properties, including cars, bikes, and even clothes. The creations of digital platforms have made it doable and practical: Airbnb allows property owners to let their available space to travellers directly, be it a bed, a room or an entire house; while Uber enables private vehicle to pick up passengers like a taxi. Today, there are roughly 150 million users on Airbnb, while Uber is active in more than 700 cities. They have grown into mature platforms, establishing regional offices around the world. In the meantime, more young start-ups are attempting to challenge these pioneers, especially in emerging in emerging economies. The ones in Southeast Asia (SEA) have also jumped onto the bandwagon.

With the surging popularity of sharing economy, consumers have been exposed to an increasingly diverse market with an array of options to choose from. This implicates a kind of freedom that is unprecedented. In the past, no one would have thought of driving and riding high-class vehicles such as Mercedes Benz around as if they were taxi – it seemed to be something luxurious and unaffordable. In 2017, it has become a lot easier to find a 7-seater car, simply with a few taps on your mobile device. No one has to wave their hands on the streets, depending on luck to secure a ride. Consumers are no longer restricted to choosing traditional services providers. The scope of economy has widened when our potential capacities can be utilised to make profits. Changes as such bring about transforming impacts on national economy – both the market and the consumer group have grown even larger as excessive assets turn into valuables.

Take the case of tourism as an example. Language barriers in transportation used to make it difficult for foreign tourists to explore the country without worrying about fraud. They may encounter underperforming and unreasonable drivers who charge them extremely costly fees, as they are unfamiliar with the local customs. On the contrary, taxi hire applications such as GrabTaxi has their price calculation framework stated clearly. Some of them are even able to estimate the travel cost prior to arrival of destination. The system of ratings is also what distinguishes these platforms from traditional service providers – customer experience becomes a key part of the trade. The availability of information and transparency provide a sense of reassurance and reliability which allows tourists to overcome the trouble of unacquainted culture. Such progress has attracted more people to visit SEA.

The expansion of this business model has also led to an alternative source of income for many, as many of us own something we might not use frequently – it can be the empty seat in your car, the guest room of your house, or the redundant bike left at home. It casts significant impacts on emerging economies around the globe by diversifying and opening up new fields for their economies. Even though the pioneers of sharing economy have progressively transformed into global brands, the idea of sharing economy has been adopted by locals as well. Being accustomed to the cultural milieus indeed gives these local developers an edge – they are capable of providing more suitable services, for instance, language settings, privacy settings, or monetary framework. Potential workers also enjoy higher flexibility when restrictions are loosened. Instead of being directly employed by a certain employer, they regain their freedom in terms of working time and hours. These measures and adjustments better cater for the needs of the people. In other words, the process of localisation brings about more consumers and providers, also inspires a bottom-up development of similar digital platforms.

Many of us probably know a lot about Uber, but what about Grab or Go-Jek? Both of them are examples of locally established platforms in the SEA region. The director of Grab, Anthony Tan emphasises the importance of localisation – Grab therefore does not only provide transportation services, it also offers delivery service and allows hitching. Facing backlash from traditional service providers, the company responded by welcoming current taxi drivers to work with them – this has made them notably more inclusive from Uber. On the other hand, Go-Jek, an Indonesia start-up company, started by providing motorbike-hailing services. These are certainly some features that reflect the locality, that motorbikes are in fact more common than private vehicles. Specific details as such differentiate them from other western-based applications, contributing to their overwhelming popularities in the region. These local start-ups are now expecting an expansion of their business, to go beyond the SEA bubble.

It appears that sharing economy can be a powerful tool in terms of facilitating national economic development and innovation, as well as improving the tertiary industry. It is predicted that ride-hailing market in Southeast Asia would grow to 13.1 billion USD by 2025 from US$2.5 billion in 2015, in comparison to 2.5 billion USD, constituting a six-fold growth. Undoubtedly, it also has respective influences on tourism trend, intercultural exchange and so on. Despite such positivity, what should not be neglected is potential risk. In fact, the legality of some of the applications and platforms remain unclear. When it comes to sharing private spaces of property, one may trigger the restriction of subletting stated in most of the rental contracts. When it comes to sharing a vehicle, fraud may still happen because of the electronic charging mechanism. The issue of security is also a general concern when it comes to sharing things, especially strangers. Laws play a significant role in these issues – by drawing boundaries to reasonably protect different parties involved. Moreover, the uprising of these unprecedented service providers are also conceived as threats. There could be strong backlash organised by unions and groups that against these ‘newbies’ in the industry, for the latter groups disrupt the norms and have completely changed their working milieu. It is vital to note that while all the advantages and enhancements brought by this new trend, at the rudimentary level, services are managed, driven, and provided by individuals. The opportunities bred by sharing economy might offer a brighter prospect to some people, but a group of people would also lose their resources. A balance should be maintained in hopes of cultivating a healthy business environment.

Nonetheless, there is a critical question worth pondering when we speak of sharing economy: what exactly is sharing economy? In the light of the above, it is commonly understood as exploiting the utilities of our idle capacities. With an increasing number of digital platforms, more people have signed up to be ‘smart’ consumers and workers. The rapid process of commercialisation has also contributed to the economy of different states and quality of livelihood of the people, with abundance of examples such as GrabTaxi, All The Thai, and Go-Jek. Many would therefore seize the golden opportunity, and deliberately create these idle capacities for the sake of earning more income. In comparison to the beginning, many Airbnb spaces are now being managed in a hotel-manner, losing the sense of a home. The idea of sharing economy starts off with a good will, an intention to share and not to waste. Unfortunately, it seems that they have been overshadowed by the economic influences. Perhaps the most valuable thing in sharing economy is the confidence to share, and to have faith in a stranger. ‘Sharing’ should be as important as the ‘economy’ – a profit-maximising mentality limits the true potential of a sharing economy.

 

Further Reading

Fortune.com (2017) Source: http://fortune.com/2017/03/07/airbnb-ceo-hosts/

Uber.com (2017) Source: https://www.uber.com/en-GB/cities/

Russel, J. (2016) Source: https://techcrunch.com/2016/07/31/grab-ceo-didi-victory-shows-we-can-beat-uber-in-southeast-asia/

Lee, Y. (2017) Source: https://www.bloomberg.com/news/articles/2017-10-01/go-jek-to-expand-beyond-indonesia-on-track-to-clash-with-grab

Yang, J. (2016) Source: https://e27.co/will-grab-like-ceo-anthony-tan-said-make-uber-lose-sea-20160808/

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