Hong Kong regulators must not stifle the city’s fledgling sharing economy
Winnie Tang says a flexible but sound regulatory regime is needed to support promising local start-ups and our largely young entrepreneurs to achieve their dreams
Many say the sharing economy is only for young people. A US survey found that 68 per cent of workers in the sharing economy are between 18 and 34, while that age group constitutes merely a third of the US workforce, according to the Bloomberg research.
There is no official definition of the “sharing economy”. However, it generally refers to activities organised around a technology platform that facilitate the exchange of space, transport, goods or services between individuals across different sectors. The initial idea was to share resources on a non-profit-making basis. One of the best-known examples is Wikipedia; Vélo’v, a bicycle-sharing system first launched in Lyon 10 years ago, is another showcase.
The sharing economy offers flexibility to workers who can dictate their hours and, in some cases, set their own prices. Often, it allows customers to rent or buy products and services at a rate lower than through traditional channels. No wonder the new economic model attracts young people.
This is reflected by Uber’s founder Travis Kalanick, who was 33 when he set up the most talked-about sharing economy platform. Brian Chesky was 27 when he co-founded Airbnb. Cheng Wei, the CEO of popular car-hailing app Didi Kuaidi, was 27 when he established Didi Dache.
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The new economy, instead of just displacing traditional jobs, has boosted customer demand. After studying Uber’s internal data, Princeton University professor Alan Krueger, a former chairman of US President Barack Obama’s Council of Economic Advisers, stated in a co-authored report that there were clear benefits for “driver-partners” and noted that new financial opportunities have been created for tens of thousands of workers. What’s more, because of lower prices for consumers compared with the traditional taxi dispatch system, Uber has attracted more customers, thus increasing income “for all workers with such skills”.
Forbes estimated that the earnings gained directly by owners and workers from the sharing economy was well over US$3.5 billion in 2013, with annual growth exceeding 25 per cent from the previous year. PricewaterhouseCoopers predicts that the global revenue from the sharing economy could reach US$335 billion by 2025.
The sharing economy is flourishing in many place. What about Hong Kong? Locally, we have several platforms established by youngsters aged around 20. One is a car-sharing site, Carshare, which encourages Sunday drivers to loan out their cars during the week. Presently, it has 1,500 cars and 20,000 members. Half use the service once a month. The daily average rate us HK$400-HK$500, and Carshare charges owners 30 per cent of the rental. A unique selling point is that it has taken out insurance to cover owners’ and customers’ liability.
READ MORE: One-third of Hong Kong’s internet users turn to apps like Uber, Airbnb as ‘sharing economy’ gathers steam
Meanwhile, introduced in early 2015, tourist service operator Sam the Local provides a matching service between travellers and tour guides, who set their own rate. Both pay a fee to the operator, of 10 per cent and 20 per cent of the rate respectively. Yet another service, the Gaifong (“neighbour” in Cantonese) app launched late last year, allows you to borrow or rent goods – from mattresses to musical instruments and electronic devices – from people nearby, rather than buy them.
Starting next year, people in the US will be able to participate in equity crowdfunding. With approval from the Securities and Exchange Commission, small businesses and start-ups will be able to raise up to US$1 million a year from almost everybody via online platforms. Currently, it is limited to “accredited investors” – people either with a net worth of at least US$1 million or an annual income of at least US$200,000. At the same time, Australia is in the process of reviewing the investment regulations of equity crowdfunding for community energy projects.
Here in Hong Kong, regulatory issues remain one of the main hurdles for local entrepreneurs before they can operate in the same mode. To rectify this, the government must modify the antiquated legislation, to allow our young people to realise their dreams.
Dr Winnie Tang is a founding member of the Hong Kong Professionals and Senior Executives Association