Bicyclists on the surge in China: where bike rental startups are heading to
【Summary】A series of bike rental startups have popped up in the recent two years in China. With a simple Uber-like business model, they are facing problems that need to be dealt with.
China is a popular country for bicyclists, and has a long tradition of people riding bikes to work, and running daily errands. In metropolitan cities such as Beijing and Shanghai, the number of cars are surging and the government is giving policy benefits to green energy vehicles. Surprisingly, bikes are becoming an increasingly popular transportation option.
The trend is leading to a series of bike rental startups popping up in the past two years, including Ofo and Mobike. The first has become the industry's shining unicorn with $450 million invested by venture capitalists, and the latter just collected $300 million in funding this year alone.
These Uber-like bike rental companies are charging less than one dollar for a bike rental. The business model is simple: pedestrians looking for a bike can open their smartphone, unlock a bike parked nearby, jump on it for a ride, and pay a fee after they've arrived at destination. After renting a bike, a user can basically leave the bike anywhere they want. The fees can be as low as 7 cents per half-hour.
For everyday Chinese commuters and bicycle lovers, having such easy way of getting a bike has given them much more freedom and pleasure. For people who cannot locate a Didi or Uber ride late at night, you could ride a bike home instead. For short-distance commuters who think taking a taxi is too expensive for them, renting a bike is a much cheaper option. Cars are often stuck in traffic jams, but bicyclists are not—a good way to save time on the roads. Meanwhile, riding bikes can be a good way for people to exercise, striking a balance after a full day of work sitting in an office cube. All of these reasons can explain why Uber-like bike rentals companies are extremely popular.
Currently, there are 30 bike-sharing companies in China, with many founded in just the last year.
However, the very factors that make the bike-rental model successful, can also lead to shortcomings. The "park anywhere" convenience is exclusive to China. Other countries who have similar startups provide docking stations that renters must return the bikes to. Such loose regulation in China often leads to bikes being left in remote locations with no nearby foot-traffic, or even parked along freeways. Some properties have bicycles jamming up the entrance, taking up space and blocking sidewalks. Media reports of bikes piling up in dumpsters, ditches, or even trees are common today.
Moreover, intentional vandalism and damage to bikes can be done by other competing bike-sharing companies. A Mobike locks and unlocks when a user scans the QR code attached to the bike. The code is often defaced by vandals, making it unreadable. To solve this problem, Mobike and Ofo reply on volunteers to spot and report damaged bikes. They also hire teams to deal with the abandoned bikes, taking them to high-traffic areas or bike repair centers. Compared with the fees customers pay for each ride, the cost of fixing and transporting a bicycle can be much higher.
Undoubtedly, bike-sharing companies are the apple in the eye of venture capitalists. As long as the financial backing is sufficient, the companies are able to solve the problems associated with bike renting. Hopefully in the near future, new and improved regulations can help this emerging industry.
After all, people like to ride bikes in China.
Claire Peng has over 6 years of professional experience in the media industry, covering TV, newspaper and online media. She was once a reporter and producer for Fairchild Television based in Toronto Canada, and worked as an English news reporter for the Global Times in Beijing. She writes mainly about self-driving, companies investment, and the enterprise lab.
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