‘Sharing economy’ takes off in Japan despite barriers

by

Kyodo

Japan’s “sharing economy” all but caught fire in 2016, inspired by a growing global trend.

Overseas giants such as Airbnb Inc. and Uber technologies Inc. have rapidly spread, and some major cities such as Seoul and Amsterdam promote themselves as sharing cities.

In Japan, the private and public sectors have firmly joined hands, with a wide variety of new services on the cusp of growth.

In Tokyo’s suburban city of Machida, Ruri Aoki, a 46-year-old farmer, shares her harvest of vegetables with no agrochemicals, offering guests meals on a hillside surrounded by fields, bamboo and cedar forests.

Aoki started hosting guests in June through the sharing economy platform TABICA, which introduces people to the daily lives and customs of local people through guides and workshops. Her Ooruri Farm accepted about 35 guests in October and November, respectively, largely “through word of mouth.” Money, she says, is not her main objective.

“I always look forward to seeing my guests leaving happily,” Aoki said in a recent interview. “Guest could have enjoyed a much nicer meal at a restaurant. More people understand the sense of value for what money can’t buy.”

The father of an elementary school-aged boy was glad his son took part in the activity, which included digging a 1-meter hole to harvest edible burdock root. They were among three families who participated in the farming.

“This is our first time to do real farming,” the boy’s mother said.

TABICA is operated by Gaiax Co., a listed information technology firm that has seen steady growth in revenue from corporate services over the past five years, according to its financial statement.

In 2015, Gaiax took over the long-distance ride-sharing service notteco, and tadaku, which lets foreign residents of Japan teach home cooking from their respective countries.

The firm has also acquired a stake in more than 30 sharing economy startups, although they have not yet paid off, Gaiax president Yuji Ueda said.

TABICA, launched in June 2015, has started attracting more hosts and guests this year. The number of monthly guests jumped more than 20-fold to over 2,000 in the seven months to October, according to the firm.

Like the farmers in Machida, several hosts earn hundreds of thousands of yen per month through TABICA. Airbnb began a similar global service called Trips in November.

Through tadaku, a Taiwanese housewife earns about ¥100,000 ($850) a month sharing home cooking and meals with guests, some of whom become repeat customers who also bring new guests to the service, a Gaiax official said.

In Japan, psychological barriers have hampered the spread of the sharing economy. According to a 2015 government survey, the vast majority of people, regardless of age group, declined to use such services as home- and ride-sharing. Around 60 percent of respondents were reluctant, citing possible accidents or trouble.

The survey also showed that people are still unfamiliar with sharing economy services, resulting in fewer users and illustrating a sharp contrast with trends in the United States, Britain, Germany, China and India.

But the landscape is changing in Japan. The number of industry players has topped 300 and continues to grow. Members in Japan’s Sharing Economy Association, an industry body established in January, has surpassed 130, industry officials said.

Four major insurance companies have also given support, providing coverage for three stakeholders — service providers, hosts and guests — to alleviate risk concerns.

Early this year, the Cabinet Office considered drafting a new law for regulating sharing economy services in the wake of trouble surrounding new foreign services, a source familiar with the matter said.

The industry reacted promptly to halt the move, organizing study groups with lawmakers and bureaucrats to help examine the sharing economy. After some back-and-forth, policy-makers took notice of the sharing economy’s ability to change socioeconomic structures and solve social problems, the source said.

A similar awakening took place in Europe. The European Commission set guidelines in June for a collaborative economy, the term more commonly used in Europe. “These new business models can make an important contribution to jobs and growth … if encouraged and developed in a responsible manner,” it said in a statement.

In Japan, the Sharing Economy Review Meeting, a panel convened by the industry and government officials, lawyers and IT and consumer issue experts, compiled de facto industry guidelines through discussions this year.

The guideline urged service providers to set voluntary rules for ensuring user safety and credibility for services while confirming legitimacy with the help of lawyers. The guideline states that a “paradigm shift looks set to begin in industry and society in the country.”

On Nov. 25 in Tokyo, the first business forum dubbed “Sharing Economy Summit” was held on the back of increased support by the government and municipalities.

Five municipalities have declared themselves to be sharing cities. Four of them partner with TABICA to attract more tourists to local towns.

The city of Hamamatsu, Shizuoka Prefecture, has dispatched an official to space-sharing service provider Space Market Inc., to learn how the city can efficiently use idle public facilities scattered across Japan’s second-largest city by land size.

The city of Kyotango on the Sea of Japan side of Kyoto Prefecture introduced Uber’s ride-hailing service as a substitute for declining public transportation and taxi services amid increased depopulation. A town in Hokkaido is conducting a similar trial.

Kidsline, a Japanese child-rearing service that matches parents with caregivers, has seen many repeat customers as users overcome psychological resistance to a service not commonly used in the country, according to President Kahoko Tsunezawa. “For our service we are entrusted with a baby’s life, so the first step for users is critical,” she said.

Arun Sundararajan, a professor researching the sharing economy at New York University’s Stern School of Business, noted the industry’s potential in his keynote speech at the summit.

“Japan has a huge advantage in growing in sharing economy because it seems that there is a fundamentally high level of trust in society within groups,” he said.