Sharing Economy as a Social Enterprise

Seoul, South Korea

The Action

The Seoul Metropolitan Government sees opportunity in the rise of the sharing economy, but not in the way one might expect. It sees a way to reduce social isolation as residents share goods and services directly with each other. It sees a way for entrepreneurs to align their financial self-interest with pro-social outcomes. It sees a way to increase the social utility of open government data. And it sees an affordable way to boost the amount of usable physical infrastructure—like parking spaces, public buildings among others—by sharing existing facilities more efficiently. Seoul aims to become the first and leading “sharing city” through a dedicated incubation and acceleration program for social impact sharing initiatives.

Democracy Challenge

Korean society has undergone head-spinning social and industrial change within living memory. There is deep concern about how rapid modernization and urbanization have disrupted traditional social structures and supports. In particular, people in cities tend to be socially isolated, and high-stress urban living creates the conditions for social conflict. 

How It Works & How They Did It

The Sharing City Seoul initiative has four main types of activities:

• Supporting district governments’ sharing projects. The metro government identifies and scales best practices from the 25 autonomous districts of Seoul, with a goal of continually expanding the sharing of tools, children’s gear, parking lots and other goods. Through an incentive system, districts can get extra budget allocations if they effectively promote sharing enterprises.
• Supporting sharing groups and companies. The metro government designates organizations and companies that solve social problems through sharing and supports eligible firms with administrative and financial support.
• Spreading awareness of the sharing economy. This includes the Share Hub online platform (a partnership with the C.O.D.E. civic-technology group, formerly Creative Commons Korea), training courses for aspiring entrepreneurs, and the Sharing Seoul Festival.
• Operating sharing services. This includes a public shared bicycle system and a toy sharing project in partnership with private companies.

The experience of one local entrepreneur, Soonam Kahng, helps tell the story of Sharing City Seoul. In 2013 Kahng started approaching local district governments to ask for data about residential parking permits. He was building an information base for his parking locator app, Modu, and residential permits (which are available for a low monthly rate) restrict a lot of on-street parking spaces. 

“Parking regulation is totally un-understandable,” Kahng said. “I parked in an empty space, and found it was residential space. The parking problem in Korea, most people think there is not parking spaces. It is not the space issue, [it is that] there is no regulation.”

At the time, data sharing was very rare, and local districts balked at his requests. Luckily for Kahng, former Mayor Park Won-soon’s social innovation team at the Seoul Metropolitan Government was interested in supporting a home-grown economy around sharing, particularly the sharing of underused public spaces and facilities. (South Korea has strongly objected  foreign companies associated with the “sharing economy”; for example, mass protests and legal action forced Uber from the country in 2015).

In 2013 Modu applied for funding in partnership with a district government, and it was selected for its potential contribution in addressing parking shortages. The company was certified by the metro government as a sharing enterprise, which gave it an advantage when approaching additional district offices. Three districts signed on in the first year. By August 2018, the company was providing parking information in 15 of the 25 districts in Seoul, with user sharing available in ten districts. 

“Many people download it just to get parking information,” Kahng said. “Then they notice cheap spots, these are the shared parking spaces.”

When residential permit holders post their spaces, Modu checks the information against district records for verification, which relieves the district government of the responsibility and liability for providing personal information proactively. The person providing the space gets the largest share of the fare, but Modu and the district government also get a portion, which encourages the district to promote the service. Private landowners have also begun sharing off-street parking lots, increasing the total supply of spaces.

“Now we are moving from the local government platform to real citizen sharing,” Kahng said. “Putting their private spaces up for sharing.”

Around the same time that Seoul began cultivating sharing enterprises, the Korean national government was also pushing open data initiatives. In response, Modu went to the national information agency with an opportunity: parking data is a valuable resource, but it is housed at the local level, and it needs to be standardized. So, a data standard was developed, and the Ministry of Interior adopted a regulation requiring every municipality to publish data to an open portal using the standard.

“At the time, government officers said, ‘Who is going to use parking information?,’” Kahng said. “They considered it a business secret or a personal privacy issue, but then navigation companies and other businesses started using it.”

Kahng said Seoul’s previous mayors achieved a lot for traditional development: wider streets, new apartments, and office buildings. Former Mayor Park Won-soon is focused on increasing the usability of those resources, he said.

“Park’s style is more human oriented, people oriented,” Kahng said. “It’s possible to change the approach and develop the city without a lot of money.”

How’s It Going?

There are diverse constituencies and conversations within the expansive Sharing City model, from software entrepreneurs to neighborhood nonprofits and groups using one of the hundreds of public buildings now available during nonbusiness hours. These different models are represented in the list of 63 sharing organizations and enterprises now designated by the Seoul Metropolitan Government, as well as in posts to Share Hub about issues ranging from transit and youth engagement to veganism. In short, the sharing ethos continues to provide a frame for discussions about urban challenges and solutions, but there is ongoing debate about which aspect of the Sharing City program should receive priority—particularly as sharing becomes more corporate driven.

The Sharing City initiative certainly attracted a lot of international attention, including a $1 million Gothenburg Award for Sustainable Development for Mayor Park in 2016. Seoul is regularly cited as the leading social innovator regarding sharing economies.

Considerations

Seoul passed an ordinance to promote sharing in 2012 to provide a legal foundation for its support to organizations and businesses, and the ordinance has been amended five times. But as in other markets, Seoul’s sharing entrepreneurs often feel constrained by regulations designed for traditional industries and firms. Seoul’s approach is to proactively identify, in collaboration with private actors, important challenges and solutions for the sector. A Sharing Promotion Committee, comprising 12 private-sector representatives and three government officials, makes many of the key policy decisions.

Point of Contact

Mr. Im Gug-hyun

Deputy Director

SMG Seoul Innovation Bureau / Social Innovation Division / Sharing City Team

[email protected]

Who Else Is Trying This?

• United Kingdom: The average family in the UK wastes £810 every year on thrown-away food, while the food sector wastes £3 billion annually. To reduce this waste, Hubbub launched a Community Fridge in Derbyshire in 2016 to redistribute food to the community. Community Fridges differ from Food Banks in that they do not offer free food, instead they aim to improve the existing food distribution system to promote healthy living and sustainable eating. Hubbub set up a network to help other similar projects, and as of 2017, there were 40 open fridges with 35 more planned. Each fridge redistributes an average of half a ton of food per month. Groups need to register their fridge as a food business and get the support of the local health officer and also pass a hygiene rating. Read more
• San Jose, California, US: In the wake of the 2017 floods that forced more than 14,000 home evacuations in the area, the City of San Jose launched “Hosts Corps” in conjunction with AirBnB—an initiative that encourages San Jose residents to offer their home free of charge in cases of natural disasters such as flooding or wildfire. The city government recognized that these environmental catastrophes are becoming increasingly common in the State of California and Host Corps is an innovative way for the community to respond more effectively with its already existing social resources. In the event of a catastrophe, Host Corps is a new group comprised of members who are existing Airbnb as well as non-Airbnb hosts who will commit to opening their homes to those requiring housing in times of need. The platform that Host Corps uses is Airbnb’s existing Open Homes Program which waives all booking fees and charges for those fleeing disaster, conflict, or illness and who require temporary housing. Both the city of San Jose and Airbnb are targeting local residents to sign up for the program via in-person events, online campaigns, and through local organizations.  
• Kansas City, Missouri, US: The Kansas City Living Lab is a public-private partnership that aims to find and test emerging technologies to facilitate the creation of viable and impactful commercial products that will solve city problems.

Additional Reading

Seoul Solution case study: Sharing City Seoul Project

Seoul Draws a City Through Sharing ebook (Creative Commons Korea)

This action was originally developed for Big Bold Cities, an initiative of Living Cities and the National Democratic Institute (NDI); republished here with the permission of Living Cities.