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'Sharing economy': Is Asia ready?

Chris Weeks | Getty Images for Airbnb

It's a nascent concept that's rapidly catching on globally, thanks to the success of the likes of Airbnb and Uber. Sharing economy, or social-economic systems built around sharing of physical resources on digital platforms, has rejuvenated sectors from transportation to hospitality in the West. And now, it's coming to Asia.

46-year-old Park Yong Soon is the chief marketing officer and one of the co-founders of BnB Hero, which is a South Korean peer-to-peer accommodation service much like its U.S.-counterpart Airbnb.

"When we decided to start the property sharing service, we had quite a solid belief that sharing would be a big economic trend. But our biggest question was: how many Asian people and families are open to sharing their house with strangers and foreigners?"

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That was back in 2012. Today, BnB Hero boasts of 5,000-listed properties on its site and has about 35,000-40,000 visitors on average every month. The site allows local residents to offer up their homes for rent by tourists, promising cheap accommodation and authentic experience.

"Singapore, Hong Kong and Taiwan are top three countries in our users list, so we are sure that Asian consumers have already started to enjoy the benefit of sharing," he said.

The company is now working to form a private accommodation belt across the north Asian countries. "We are already working with strong local partners in China and Japan. These countries take a significant share in Asia travel industry,and will be a big enough playground for us to expand," Park said.

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According to PwC, the world's top sharing economy sectors could generate around $335 billion in revenue by 2025, from $15 billion today. That's an exponential jump of over 2,000 percent, and Asia is in prime position to benefit, it says.

"Asian countries enjoy one of the best Internet and mobile connectivity in the world,so jumping on the digital platform of a sharing economy is inevitable," said R Raghunathan, management consulting partner at PwC.

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 there's increasing evidence the concept is gaining traction in other parts of the region.

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In China, Xiaozhu.com has a growing clout of visitors to its site which rents out homes for short periods. Malaysia-based Plateculture.com offers home-cooked meals for visitors who want to experience a taste of dining at a local's dinner table. And Singapore has private car rental marketplace iCarsClub and PandaBed which provides short-term rentals.

Regulatory hurdles

But as with most disruptive technologies, there are regulatory hurdles to overcome,not least in a region as diverse as Asia.

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46-year Singaporean entrepreneur Moh Hon Meng founded sharetransport.sg in 2012, a site that allows commuters in Singapore to share rides on cars, taxis and customized bus routes. He makes money by arranging journeys on routes that are not well served by public transport.

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While he is collecting fees from the bus pools, he has yet to make money from the car and taxi pooling services provided as he has not been able to agree with the government on a fee structure. "It's tough because regulations are unclear," he said.

Popular U.S.-based taxi-share app Uber is facing a tough time expanding overseas, especially in Europe. Its offerings have the industry there up-in-arms –licensed taxi-drivers from London to Paris and Barcelona held major protests in June, angered by the app's apparent threat to their livelihood and what they say is a largely unregulated service. Last week, Germany became the latest country to ban Uber services, following in the steps of Belgium in April, citing concerns over passenger safety and protection of the taxi trade.

According to PwC's Raghunathan, it's natural for traditional sectors to feel threatened by new technologies, but to succeed, corporates need to move with the times.

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"Uber's innovation, like many other sharing companies that have come into the market, is disrupting the traditional business models. It is only natural that these established companies feel uncomfortable with these developments, as they have invested a lot of resources, finances and time into building up their businesses," said Raghunathan.

"That being said, in today's new world, with technology so readily available, it plays a dual role as both an enabler and disruptor. Businesses that embrace technological change and leverage it to expand and develop new markets,products and services, will be the ones that succeed," he noted.

While governments have the responsibility to protect the intellectual property and assets of established players, it will be a balancing act as they need to create an environment where innovation and creativity is encouraged, Raghunathan added.

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Ultimately, industry players say the sharing economy works as it fulfills social needs while allowing money to be made.

BnB Hero's Park sums it up: "The hosts get extra income and new friends. Guests get quality services at affordable price and new friends. Governments get a new service industry, which will eventually make their citizens wealthier and increase their tax income."

Contact Asia Economy

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