People used to be accused of “oversharing” if they got a little too personal. Those days are long gone — today, it’s all about sharing.
The global sharing economy is thriving. It should rocket from US$15 billion in 2013 to US$335 billion in 2025, according to a PwC report. That means it will grow to be 20 times the size within just 12 years.
Of course, we’re still inventing and defining what “sharing” means. The growth will be concentrated in five sectors: peer lending, online free-lance work, home sharing, transport sharing, and online-content streaming.
Company owners will share their services, but not their wealth. The search is on for the next “unicorn” company in Asia to top a valuation of US$1 billion.
Uber and Airbnb have made great inroads into Asia from the West. But Asia is also fostering its own string of startups. Go-Jek, Grab, Didi Chuxing, Ofo and Alipay have become household names.
China alone has a sharing economy with revenues of US$763.5 billion as of 2017, up 47.2% in a year. App culture is all-encompassing in urban China, the sharing sector involving 700 million people, or roughly half China’s population. It’s significant enough as a segment that the data comes from the government-run Sharing Economy Research Center, set up by the State Information Center. Sharing provides 7.2 million jobs, or 10% of the total in China’s cities.
Sharing hit an inflection point in Southeast Asia in 2018, according to Google and Temasek.
The research partners estimate the Internet economy rose to US$72 billion in the region last year, more than double the US$32 billion three years prior. Most shocking, though, they estimate it will close to quadruple in the next seven years, to US$240 billion by 2025.
They highlight nine unicorns in the ASEAN region alone. Besides Go-Jek and Grab, the gaming-screen maker Razer, the “Southeast Asian Alibaba” Lazada, “online warung” e-commerce network Bukalapak, online-travel booking site Traveloka, Vietnamese online-entertainment provider VNG, e-commerce-to-finance network Tokopedia, and gaming/e-payment/e-commerce network SEA can all claim to be one-horned horses. Since they overlap in many ways, you wonder if they cooperate, or are effectively in a unicorn race.
What does sharing mean to me?
For starters, sharing isn’t free. A sharing economy involves sending products and services between consumers or businesses for a fee. The idea is to make assets useable over a wider customer base, a broader geography, and ensure they are used more often or efficiently. That allows more users to benefit from them, while increasing their value relative to their lifespan.
Of course, efficiently sharing goods for a fee is by no means new. For decades, consumers have paid to rent tools, cars, books, and DVDs, indeed many other things. Is “sharing” really just “hiring” under a fancy name?
What makes the sharing economy different is how shared assets are accessed through new technology, particularly apps and digital platforms. It is now easier than ever before for the owners of assets, as well as those people wishing to use them, to find one another. In many circumstances, it’s also possible to eliminate an agent or middleman, who used to charge a hefty finder’s fee.
Serviced office or tech hub?
Regus, now rebranded as the International Workplace Group, has offered serviced offices for years. Since 1989, in fact, which in e-commerce terms might as well be 1898.
So what’s different about the “shared workspaces” or “collaborative culture” marketed by WeWork? Or indeed its Chinese competitor Ucommune (previously named the suspiciously similar UrWork until a lawsuit)?
Across the Asia Pacific region, the market for flexible workspaces has taken off strongly in the last five years. It grew 35.7% every year between 2014 to 2017, according to research by Eastspring Investments. That outpaced the pace of growth in the United States, which was 25.7%.
In Southeast Asia, the growth of co-working is closely tied with a rising Internet penetration rate, which now stands at 58%, according to We Are Social. The growing online population has combined with the rapid development of e-commerce, spawning the need for space, and a robust start-up ecosystem.
For example, in Singapore, co-working spaces have made it possible for startups to break into new markets and scale. That’s not just because shared space is cheaper than a traditional office lease, or available for shorter terms. There’s also easy flexibility to add or subtract seats as headcount flexes, and access to shared office equipment. Every startup doesn’t need its own printer.
The big selling point, of course, is that the businesses are supposed to cross-pollinate with ideas and services. There’s an allegation in China that this does not happen, because entrepreneurs are too scared their neighbour will steal their idea. Chinese co-working space is seeing a shakeout, since it appears the flood of operators were overpaying to rent space they sublet at a loss to win clients. That business model can’t continue for long.
Online lenders serving small business
Over the last few years, online peer-to-peer (P2P) lending has become a popular alternative to traditional financing in Asia. P2P lending is a method of debt financing that uses technology to connect borrowers with lenders.
In 2017, online alternative finance in the entire Asia Pacific region reached a total volume of US$361.9 billion. Small and medium enterprises (SMEs) are the key benefactors of these platforms.
SMEs account for 40% of Southeast Asia’s economy, according to Deloitte. But they often struggle to get service from Asian banks, which are typically big, even state-owned. So far, there has been little innovation in the traditional Asian banking sector, which prizes stability over interesting ideas.
A separate McKinsey report notes that 39 million small businesses have limited access to financing due to strict banking regulations. Alternative financing from P2P lending has emerged as the most-convenient way for SMEs to find lines of credit.
Ride-sharing continues to grow
Asia is proving a challenge for Uber, although it made great strides initially. The complexity of regulation throughout the region makes life difficult for a player from outside the continent. Yet the ride-sharing industry thrives in Asia, where hitching and motorbike taxis have been a way of life.
Fewer Asians own cars than Europeans or Americans, per capita. As a result, 70% of all ride-hailing trips in the world happened in Asia, according to ABI research. That’s almost three-quarters of the 16 billion shared-transport trips worldwide.
Local companies dominate individual markets in this part of the world, where they can make better sense of local rules and customs. There’s Didi Chuxing in China; Grab and Go-Jek in Southeast Asia; and Ola in India. The ride-sharing concept was initially targeted at users of public transport who wanted better service, at a cheaper price than taxis. Asian startups have since reinvented the game by coming up with two-wheeled options to e-hail.
In India, the world’s largest market for motorcycles, scooter startups like Bounce and Vogo are thriving, both based in Bangalore. In Indonesia, Go-Jek has expanded into logistics, food delivery and many other services, as well as into Vietnam and Thailand. In the Philippines, there’s Angkas. These companies are tweaking the ride-sharing business model to suit the needs of the local market.
Who gets the next share?
With each passing year, the “sharing economy” ceases to need those quote marks. It’s increasingly embraced by consumers. It’s just part of the economy, a mainstream way of life and business.
These new business models, made possible by new technology, do raise issues around privacy and consumer protection. What constitutes an “employee” is also a contentious issue. Industries need to demonstrate they have the necessary controls that ensure responsible business practices and protect consumers.
The sharing economy is touted as better, more-convenient new option over traditional business models. It emphasizes efficiency, sustainability, and a sense of community. As more money pours into the industry, we will see if those sentiments are fluff or made of real stuff.
The disruptive nature of the sharing economy certainly creates new flexible economic opportunities for local communities. However it can be seen as destabilizing for those communities that have long depended on traditional industries.
Across Asia, new jobs no longer revolve around the traditional office-based “9 to 5” working day. Sharing economy jobs can empower individuals and provide them with new and different income streams. However, with increased flexible opportunity comes reduced job security.
The rideshare drivers, remote workers, food-delivery riders, property owners and managers are more than likely passionate about the freedom and rewards granted by their sharing economy work. It may afford them more income, better work-life balance and control over their schedules, however it remains to be seen if they will share in the wealth alongside the unicorns they have helped to create.