TOKYO • Thousands of Airbnb reservations scrapped and ride-hailing app Uber reduced to delivering food - life is hard in Japan for giants of the sharing economy, stuck between tough regulation and popular suspicion.
Japan may be the world's third-largest economy and a high-tech hub, but it has been surprisingly slow to warm to the sharing economy that has disrupted markets across the globe.
According to 2016 data compiled by research institute Yano, the sharing economy accounted for 50 billion yen (S$618 million) in Japan.
While that is a 26 per cent year-on-year rise, it is a drop in the ocean compared with markets in Europe, the United States or China, which are worth tens or hundreds of billions of dollars.
This is partly due to confusion among the Japanese public about what the sharing economy is: Only 2.7 per cent of the population is familiar with the concept, according to a 2017 survey by PwC professional services firm.
Strict local rules have also held back the sector - as flat-sharing firm Airbnb found out to its cost.
On June 15, a new law came into effect that sought to regulate the short-term rental sector. Although welcomed by Airbnb as a way to clear up the legal grey zone in which it was operating, it has become a double-edged sword, with thousands of owners forced to remove property listings after failing to comply with it.
"This stinks - and that's an understatement," fumed Airbnb as it announced it was cancelling thousands of reservations with owners who had failed to obtain a registration number by June 15. The law also prevents owners from renting out properties for more than 180 nights per year, and the local authorities can impose further restrictions.
For Airbnb, the laws seek to protect the hotel industry and ryokans - traditional Japanese inns - whereas the taxi lobby has made it difficult for ride-sharing app Uber to set up shop in Japan.
"To promote the sharing economy, we have to loosen regulations" to allow new players to enter the market, said Professor Hiroyuki Kishi, a former official at the Economy Ministry who is now at Tokyo's Keio University. He believes that despite the reform efforts of Prime Minister Shinzo Abe, the government has "no intention" of opening up the sector "for fear of a backlash in sectors which have enjoyed a monopoly until now".
Sharing-economy firms have faced pushback elsewhere too, with Uber being accused of skirting regulations and Airbnb criticised for transforming residential areas in many popular tourist destinations.
Mr Takashi Sabetto, from a group that aims to promote the sharing economy, said "public opinion (in Japan) is very much against services like Airbnb and Uber".
One reason is that "Japanese are very protective of their privacy". The culture of sharing is not ingrained in society and - in the case of Airbnb - they do not like the noise and security risk caused by tourists in their backyard, he said. Also, the quality of service provision is very high in Japan. Hailing a taxi in a major city rarely takes more than a few seconds, lowering demand for Uber-type services.
Despite this bleak picture, there are some successes, noted Mr Sabetto, with younger generations showing "a greater interest" in the sharing economy. Car-and bike-sharing schemes are taking off and meal delivery service UberEATS has been a hit in Tokyo since arriving in 2016.