Before it’s too lateKorea is at an impasse when it comes to implementing ride-hailing services, one of the most up-and-coming businesses expected to reshape ground transportation landscape in the future.
Uber is estimated to be worth close to $70 billion and Grab around $14 billion, with the latter having pulled in investment of $7.5 billion to date. Chung Euisun, the executive vice chairman and heir apparent of Korea’s top automaking conglomerate, Hyundai Motor Group, also envisions a day when the car industry cannot expect to make money from selling cars.
“Young generations are not as keen on the idea of buying cars or even getting a driver’s license. We have to shift our business to services,” he said.
Ride-sharing is becoming commonplace everywhere except Korea. The service cannot pick up due to strong resistance from the mainstream — mostly taxi — industries and over-regulation.
A government official finally spoke his mind over the affair. Choi Jong-ku, chief of the Financial Services Commission (FSC), has been arguing with Lee Jae-woong, CEO of Socar, one of the few surviving car-sharing platforms. Lee accused the government of being cowardly and negligent.
A rebuke came from the top financial chief: “The government has been doing its best to balance innovation and an inclusive economy. It is as important to tend to the shadows of innovation as promoting it,” Choi said.
Choi is right to point out that the government must pay attention to shrinking industries. Traditional industry inevitably becomes victimized during transitional periods.
Taxi drivers fear the loss of their livelihood as the result of ride-hailing services. They must earn a living by driving because they cannot find work elsewhere. Their woes must not be taken lightly. Lee and others in the ride-sharing industry would be well aware of their anxieties.
The conflict has been widening because the Land and Transportation Ministry has neglected its role as referee. The government must try to mediate between the parties to come up with the best solution for the economy and consumers. The only measure it came up with was to allow ride-sharing during the rush-hour, which hardly helps anyone.
The ride-sharing business is slowly dying in Korea, even as it grows and adds value elsewhere. Foreign rivals are moving on to smart city projects based on the data they have built on their customers using ride-hailing service. Korea will fall behind more and more in future mobility and lifestyle.
Some already suspect the Transport Ministry is dragging its feet out of fear that it would lose its authority in the vehicle industry.
The inaction seriously raises questions over whether the government actually wants innovation-led growth. Korea will lose the will and resources for innovation if the industries are stifled with regulation and inaction.