SEOUL, Korea, Feb. 12 (Korea Bizwire) – As the economic recession deepens, people’s spending power weakens too. In order to cope with the hard times, more and more people rely on ingenious ideas such as sharing and rental instead of outright purchasing. The practice of rental has been with us for years when it comes to home appliances such as water purifier and bidet. Now the range of items available under a rental contract has expanded quickly to air purifier, styler steam closet, and the like.
The aggregate sales volume from rental contracts by leading home appliance companies specializing in water purifiers such as Kyowon, Coway, Chungho Nais, and Tongyang Magic was 1,812.7 billion won in 2012 from 1,314.4 billion won in 2008, up 38 percent in five years’ time. For the years, the sales growth rate of Coway, the leader in the water purifier business, has been only 25 percent. But other latecomers such as Tongyang Magic (140%), Kyowon (118%), and Chungho Nais (81%) saw their sales rise in a fast pace.
According to DIGIECO, KT’s economic research institute, Korea’s rental market is forecast to grow to 25.9 trillion won by 2016 from 19.5 trillion won in 2011 (including auto lease). Of this, the segment for home appliance and furniture rental (11.4 trillion won) would account for the largest share, followed by industrial equipment lease (9.0 trillion won) and automobile lease (5.5 trillion won).
One advantage of renting an item in place of buying is that customers won’t have to worry about after-sale services such as filter replacement, cleaning, and repairs, especially for items such as water purifier, air cleaner, and bidet, in addition to smaller initial payment than purchasing upfront.
An emerging idea called “sharing” is fast catching on, as well as rental. U.S. Time magazine even listed sharing as one of the top-ten innovative ideas that would change the world in 2011. Sharing is intended to reduce consumption by using the same item by multiple individuals, thereby accelerating the advent of a sustainable economy. The best-known companies in this initiative include Airbnb (house sharing) and Zipcar (car sharing) that have now become major companies from fringe movements only a few years ago.
In Korea too, the practice of auto sharing has been spreading, albeit at a slow pace. GreenPoint, a company operating a car-sharing service “GreenCar,” said its membership number has surpassed 120,000, with more than 1,000 cars in its fleets. AJ Rent-a-Car, a major conventional rental car operator, has begun a car-sharing service in the City of Incheon since last month on an experimental basis. The three Hyundai Group companies including Hyundai Capital (finance company), Hyundai Card (credit card issuer), and Hyundai Automotive Group plan to offer a car-sharing service to residents of Hyundai’s “Hill State” apartments across the country beginning in 2015.