South Korea wants to be a leader in the sharing economy, but is it doing enough?
IN 2012, Seoul mayor Park Won-soon launched Sharing City, a project aimed at supporting local start-ups and promoting the shared use of both public and private resources.
In short, it was a program directed at making South Korea a frontrunner of the sharing economy, therein an attempt to paint the nation as relevant, forward-thinking, and interested in reviving local communities through the shared spirit of entrepreneurship.
But five years later, was the project just for show?
South Korea hasn’t had a great record with Silicon Valley start-ups despite Park’s attempts at branding the city as “a global leader in the sharing economy”.
For instance, ride-sharing app Uber incited a war against local taxi drivers and was banned in 2015 before being relaunched under stringent conditions.
These days, the company is authorized to operate only its high-end UberBLACK service while UberX remains banned.
Park was quoted: “I supported Uber because I thought it was a very original idea. Nut Uber was provocative… and that pissed the government off.”
The mayor iterated that there’s a fine line between “innovation” and “disruption”, and defended his tough laws directed at foreign start-ups.
He added that as Uber was “very stubborn” and stuck to its own operating methods, he “had no choice” but to uphold Korean laws.
Some of the legal obstacles that Uber faced in the country were senior executives being charged with breaking local transportation laws, including those that require all drivers to be licensed taxi drivers.
In the time it took for Uber to launch its UberBLACK service to comply with local regulations, KakaoTaxi, a rival ride-hailing service quickly dominated the local market.
In a smart move, KakaoTaxi had also signed memorandums of understanding with organizations representing licensed taxi companies and drivers, including the Korean National Joint Conference of Taxi Association, the Seoul Taxi Association, the Federation of Korean Taxi Workers’ Union, and the Korean Taxi Workers’ Union.
Airbnb – also a successful testament to the sharing economy – learned from the predicaments of Uber and met several times with Park to negotiate terms.
Despite continuous efforts, it was reported last year that 1,500 out of 24,000 listings nationwide would have to be deemed “illegal” and subsequently deleted.
In South Korea, properties advertised on sites like Airbnb are required to report to central and local governments as operating lodging businesses for foreigners.
A report in Forbes said that it is also illegal to convert studios in high-rise buildings intended for offices and residences. These types of listings make up a huge number of Airbnb listings, especially those in the hip district of Gangnam.
An Airbnb spokesperson in South Korea commented on the crackdown: “We are trying our best to identify all the illegal listings. But identifying the hosts is quite difficult.”
Park refuted that South Korea was upholding local laws for “protectionism” and emphasized that the regulatory push against Airbnb was purely for safety and hygiene reasons.
According to Sustainable Growth, despite the success of the Sharing City program, outdated federal regulations that stunt conducive growth still exist.