A new wave of economic innovation in Seoul
Mayor Park (directly in front of the sculpture) and Seoul citizens hear the call for a sharing city.
Citizens the world over are rallying around the sharing economy as a solution to the pressing challenges they face. Cities, which are perfectly positioned to enact big changes on a human scale, have the potential to lead this movement.
Seoul, a city of 10 million people, is a shining example of how to do just that. The city government has officially embraced the sharing economy by designating Seoul a Sharing City and is working in partnership with NGOs and private companies to make sharing an integral part of Seoul's economy.
Last year, Shareable reported on Seoul’s Sharing City initiative shortly after it was launched. Announcements had been made and initiatives were seeded, but Sharing City Seoul was brand new.
Now, over a year into the execution of the Sharing City project, we checked in to see how things are progressing. What we found is a city, led by Mayor Won-soon Park, a political independent who spent 30 years as a human rights activist, that is committed to the official implementation of the sharing economy. Other city leaders take note: this mind-bogglingly dense city is creating an official sharing ecosystem and, led by the Seoul Innovation Bureau within the Seoul Metropolitan Government (SMG), they are seeing promising early results.
Tool libraries are one of dozens of Sharing City projects.
Setting the Sharing Stage
Now one of the world’s most modern mega-cities, Seoul was leveled during the Korean War. But it has grown at a blazing fast rate to become a global leader in many dimensions since.
The rapid industrialization of Seoul, and the more recent economic slowdown, however, have come with a heavy price including high unemployment, housing costs, and air pollution. Within Seoul, there has been little peer-to-peer exchange of goods. Like other economies marked by high levels of consumption, people tend to buy things new rather than share. This consumption mindset has led 49 percent of households into debt and created a massive waste management challenge as nearly 9,000 tons of trash is generated by Seoul every day.
Along with environmental problems, rapid growth also created social challenges. As Seoul expanded into a megacity, people became more and more isolated. In the last 10 years, the number of seniors living alone in Seoul has grown from 90,000 to 230,000 and the suicide rate in Seoul has nearly doubled from 1,376 to 2,391, which has contributed to South Korea leading OECD countries in suicide per capita. The fast pace of life in Seoul has contributed to South Korea ranking second in hours worked and having one of the lowest happiness scores among OECD countries.
Taken together, it's obvious there's a pressing need to reinvent the city. Seoul is certainly not the only city with these issues. It is, however, fertile ground for the sharing economy to take root. Seoul has built world-class IT and civic infrastructure; it has the highest fiber optic broadband penetration and fastest Internet in the world; it offers free WiFi service in all outdoor spaces; and has the highest smartphone penetration rate in the world at over 67 percent. It also has one of the best subway systems, also wired for high speed Internet.
Using this infrastructure, in addition to strong public-private partnerships, the Sharing City project is working to connect people to sharing services and each other, recover a sense of trust and community, reduce waste and over-consumption, and activate the local economy.
Trying on suits at OpenCloset, one of the sharing company startups in Seoul
Inside the Sharing City
Mayor Park is leading a wave of social innovation in Seoul and opening a new chapter in the city's history. The Sharing City is a sharp turn from the rapid growth of the last 40 years, but it’s one that the city government is fully embracing. And one that has the potential to transform "The Miracle on the Han.”
Shareable’s co-founder Neal Gorenflo, who recently visited Seoul, points out that this ability to change quickly could catalyze their sharing economy. “If the South Korean people decide this is where they want to go,” he says, “I think they'll move quickly—just as they were able to move quickly to become a modern country.”
The city’s density, its tech-enabled citizenry, and world-class infrastructure can support Seoul’s plan to become a global leader of the sharing movement. As Su Jeong Kim of the Social Innovation Division explains, Seoul has a unique environment with 60 percent of its inhabitants living in apartment buildings. The city is leveraging this by catalyzing the formation of lending libraries in apartment buildings. There are now 32 apartment building lending libraries. While this is a small number for a mega-city, apartment building lending libraries have the potential to become social hubs for Seoul's many vertical communities.
“Seoul is a very dense city,” Kim says, explaining that a quarter of all South Koreans live in Seoul. “You can imagine how dense our city is. As a result, there are lots of apartment complexes with 1,000-2,000 people living together. It’s a difficult situation for community-building, but at the same time, it’s a very nice environment to gather...”
In-dong Cho, director-general of the Seoul Innovation Department, stresses the importance of utilizing these densely-populated apartments in rebuilding a sense of community.
“In order to regenerate communities in apartment complexes,” he says, “we recommend people establish share bookshelves, share libraries, share gardens and common tool warehouses, and to organize community activities through subsidies or grants.” He adds, “These movements toward sharing will restore dissolved communities and revive sharing culture in citizens’ daily lives.”
Grassroots citizen-driven sharing is just one aspect of the Sharing City. Another is official support for tech startups and other organizations working to catalyze more sharing in Seoul. But rather than taking a top-down approach, the city is acting as partner for emerging sharing initiatives.
“It is not desirable for government to directly intervene in the market to promote the sharing economy,” says Cho. “The city needs to build infrastructure such as law, institution and social trust capital—the city needs to pave the way and strengthen the ecosystem for the sharing economy to thrive.” He adds that the sharing policy model of SMG is not a top-down nor bottom-up approach. “This is a creative, private-public partnership model of Seoul’s own.”
Shared bookshelves are being created as a way to reduce consumption and build community
Seoul’s Sharing City strategy has three prongs: change outdated laws and systems; support sharing enterprises; and encourage citizen participation. Dozens of programs have been launched to support the initiative. They range in size from small, shared bookshelves to large-scale carsharing. Here are the key programs, some with initial results.
Public Buildings: Since the launch of the Sharing City, 779 public buildings have been opened to the public during idle hours for events, meetings, and more. These buildings have been utilized over 22,000 times by Seoul citizens.
Startup Incubation: 20 teams were selected for the Youth Business Startup Incubation program where they were provided office space, funds, and training or consulting.
Financial Support: 461 million won ($450,000) has been invested in 27 sharing organizations or businesses. Among these are platforms that facilitate Airbnb-style homesharing, children’s clothing exchanges, parking space sharing, and goods sharing. These projects resulted in 359 shared parking lots; a 68% increase in homestays; and a doubling of the amount of children’s clothing shared from 18,000 to 40,000 items.
Startup School: To encourage entrepreneurialism, officials launched a program to help entrepreneurs understand the sharing economy and support them in creating sharing businesses.
Housing and Inter-generational Connection: To address the housing crisis and reduce the social isolation of seniors, a program was created to match young people with idle rooms in seniors’ houses. There have been 28 matches to date.
Seoul Youth Hub: Another initiative of the SMG, Seoul Youth Hub is a place for young adults to come together face-to-face to design the future society.
Bartering for Goods: Using e-Poomasi, people can barter for goods or services without using money. There have been 21,052 sharing transactions by 5,685 citizens in 15 districts so far.
Open Data Plaza: 1,300 data sets have been released to the public for use in business or civil society.
Lending Libraries: 32 lending libraries have been opened for books, tool rental and repair (plus woodworking programs).
Public Wi-Fi: 1,992 wireless access points have been established at markets, parks and government offices.
Seoul Photo Bank: Nearly 250,000 photos have been uploaded to this platform that sources images from citizens and the government. The photo bank is due to launch in July.
While these may seem like modest results for a mega-city, Mayor Park has a plan to scale the sharing economy.
Creative Commons Korea is a partner in the Sharing City. Here, they give a presentation about data sharing.
How Mayor Park Plans to Scale Seoul's Sharing Economy
Sharing City Seoul supports both the creation of new sharing businesses and the growth of existing companies. Some of the standouts of Seoul’s sharing economy are: Kiple, a children’s clothing exchange; SoCar, a carsharing service; Zipbob, a p2p mealsharing platform that has a lot of traction; Kozaza, which is like Airbnb for traditional Korean houses, known as Hanok, that Gorenflo describes as “very beautiful, cozy, human-scale houses”; home sharing platforms BnBHero and WooZoo; suit rental platform OpenCloset; and Wisdome, a knowledge-sharing platform. Several of these businesses have seen 100 percent growth since the launch of Seoul’s Sharing City initiative.
To build trust in sharing companies, the Sharing City Seoul project is being rolled out through its 25 boroughs known as kus. Seoul's kus are similar in size and budget. Each ku has its own mayor and local government. Because government-endorsed businesses are trusted by citizens, SMG introduced the sharing economy to two kus by endorsing Kiple, the children’s clothing exchange. The experiment proved to be successful -- Kiple doubled sales in one year.
With this success, more kus want to join the trial. To fuel growth further, SMG created a positive competition between kus for sharing-related government grants.
One of a growing number of goods sharing sites in Seoul
Sharing City Challenges
Like other cities, the sharing economy in Seoul chafes against outdated regulation that hampers sharing. Familiar issues, including regulations around car insurance and home sharing, are being addressed as part of the Sharing City initiative. Leaders are working with insurance providers and regulators to develop solutions.
“The main reason why SMG has actively implemented the sharing policies initiatives is that we want to expedite and boost the sharing economy through public-private partnership,” says Cho. “The startup businesses need to overcome a lot difficulties and obstructions to establish themselves. They cannot avoid confrontation and conflicts with existing industries, laws and regulations.”
He explains that startups will have difficulty addressing these matters on their own and that this is why SMG is working to reform regulation and lay a foundation for a sharing economy ecosystem.
“In other words,” Cho says, “the city of Seoul helps the sharing companies to take root well and settle down successfully in their markets.”
Many of the key decisions for the Sharing City project are made by the Sharing Promotion Committee comprising 12 members from the private sector and three from government. This reflects the city’s strategy to grow the sharing economy through public-private partnerships rather than in a top-down fashion.
A Growing Movement
Seoul is the sharing leader in South Korea, but other cities, including Busan, the second largest city, and Gwangju, are following Seoul's lead with similarly ambitious plans.
Around the world, cities have tiptoed into the waters of the sharing economy, but too often, it’s little more than a gesture. Seoul is a shining exception.
“They’re serious about it,” says Gorenflo, pointing out that other sharing city projects that have been announced with little follow through. San Francisco’s Mayor Lee was recently criticized because he created, but did little to nothing with, his Sharing Economy Working Group. Similarly, 18 mayors signed on to a Shareable Cities Resolution at the US conference of mayors in 2013, but there doesn’t appear to be any follow on activity there either.
“A big lesson is, if you’re going to publicly declare yourself a sharing city, you better do something substantial or you’re going to get criticized,” says Gorenflo. “Seoul’s effort has substance. There are significant resources behind it. It’s well-integrated into their plans, and with their large innovation department, they’ll be able to implement it.” He continues, “Another lesson for cities is that you have to invest in social innovation; you need to experiment to find solutions to social problems, and you need resources to run experiments. That’s what the Sharing City is, it’s an experiment, and it may be the most important one in the world.”
Top photo: Outside Seoul City Hall, there's a model of an ear that symbolizes Mayor Park's commitment to listening to Seoul citizens. Follow @CatJohnson on Twitter.
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