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Wednesday 21.03.2018 | Name days: Una, Unigunde, Dzelme, Benedikts

Uberization of the economy – what it means and what businessmen should watch out for?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUSituation on the market plays a major role for business development, as does the ability of businessmen to compete and adapt to the changing environment. Modern technologies and market powers assist with rapid development of collaborative economics, which means sales of goods and services online, as BNN was told by Coface Latvia Director Arnis Blumfelds.

He explains that ‘to uberize’ means introducing changes to the service market with different purchasing or usage options, especially using mobile technologies. According to the expert, such a business approach offers a number of advantages, as well as challenges for legislators and traditional businessmen.

Pressure on taxi and hotel businesses in France

Collaborative economics improves consumers’ trust with convenient services, low prices and transparency. France is one of the leaders in the field of collaborative economics, with more than 50 countries working in this field.

Over the course of the year, the number of insolvencies declared by taxi companies in the country has increased by nearly 60%. In Paris alone the number of bankruptcies has grown 135% in the past three years. The number of private service providers, such as Uber and Taxify, has increased seven times since 2013, providing 13,000 jobs. At the same time, data shows that the increase of service providers balances out the loss of insolvent companies.

In spite of the appearance of alternative hotel service Airbnb in France’s capital in 2012, the number of hotel bankruptcies has declined 58% in the past two years. From this it is possible to conclude that the number of places of accommodation in Paris has not been sufficient before Airbnb’s appearance. IN 2015, however, the situation changed and the number of bankruptcies rapidly grew by 117%. Although terrorist attacks at the beginning and the end of the year had shaken up the hotel business, the number of Airbnb rooms has doubled this year, exceeding 55,000 in August, Blumfelds said.

According to him, to reduce pressure on traditional business, the French government plans to adopt stricter control. Among potential measures include additional tax revenue, limitation of the number of days people are allows to rent rooms , as well as coordination of availability conditions between private car rent service providers and taxi companies. Estimates suggest reducing the number of privately rented vehicles by 20% would eliminate approximately 2,600 jobs.

Catch legislation by surprise

In parallel with creating new jobs and addition of innovations, rapid service development has managed to catch legislation by surprise, leaving it unable to cover changes. According to the European Commission, current legislation often does not comply with the needs of collaborative economics. It has to be balanced and it has to contribute to equality of market players, as well as ensure security of goods and services. EC has asked member states to assess the coverage of their legislation and adapt laws accordingly if need be.


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