Bike sharing done right: A real Chinese innovation
The bike-sharing companies that are powering a transportation revolution in China’s urban centers are not like those in the rest of the world. Their bikes have no docking ports or designated zones for parking. Instead, riders open their smartphone apps, hop on, and start pedaling.
That means China’s major cities are littered with thousands of colorful bikes: They are parked at random on sidewalks, tucked down alleyways (although non-public parking is prohibited), waiting outside metro stations and bus stops during the day, and resting outside housing complexes at night. Where there are people, there are bikes.
“I can find them everywhere I need them,” said Zhang Hua, 25, who manages a ramen restaurant in central Shanghai and has become a frequent user of Mobike. Using a smartphone app, Zhang can locate a bike via GPS, then scan its QR code to unlock it. He notes that using a bike-share platform has halved his commute, from 40 minutes by subway to a 20-minute door-to-door bike ride.
“It saves money, too,” said Zhang. “Before, it was always a struggle about whether I should take a taxi or not. Maybe it’s not far enough to need to take a taxi, but it’s not close enough to walk, either. Now the problem’s solved.”
Is laughing on a bicycle cool again?
Cycling had long been on the decline in China. Factories assembling foreign-manufactured bikes were first established in China in the 1930s, but the bike only really took off as the commuting tool of the people after the Communist Revolution of 1949. China’s first Five-Year Plan for the years 1953 to 1957 proposed a 60 percent growth for the bicycle industry. By 1958, the country was producing more than 1 million bicycles annually, and streets full of bikes became one of the iconic scenes of Mao-era China. In 1980, cycling made up nearly two-thirds of all travel in Beijing. And as incomes rose during the 1980s, bicycles were a hot commodity: Bike ownership quadrupled in that decade to the extent that in 1990, there was one bike for every two people in China.
But as incomes continued to rise and cities began to sprawl, this began to change. Government urban planning strategy shifted to focus on cars and automated mass transit. In 1994, China designated the automobile as a “pillar industry,” and government encouragement of manufacturing and private ownership of cars decimated the bike-riding population. By the mid-1990s, the government “considered the bike old-fashioned, and it wanted to modernize the images of cities,” explained Dr. Peng Zhong-Ren, professor of urban and regional planning at Shanghai Jiao Tong University and the University of Florida, Gainesville. “They thought that the bike was not helping, but impeding modernization [and that] the modern city should be car oriented,” Peng said, in explanation of the removal of bike lanes in Shenzhen and other cities in order to make way for the real economy stimulators — cars.
By 2010, the bicycle had become a symbol of poverty and backwardness. That year, China overtook the United States as the world’s largest auto market, and a contestant on a TV dating show said that she would rather “cry in the back of a BMW than laugh on the back of a bicycle,” a comment that became a popular internet meme.
But gridlock traffic jams in major cities soon began to change people’s attitudes to bicycles once again. In 2015, ofo (they use lower cases letters and pronounce it “O-F-O”), China’s bike-share pioneer, launched its first fleet of bicycles in Beijing. The bikes’ distinctive yellow frames were soon met by the orange-rimmed, basket-equipped models launched by Mobike, ofo’s main competitor today. In little over a year, the two companies have had a tremendous impact on revitalizing cycling in China, particularly among young people. Ofo placed 1 million bicycles across 35 cities and registered 15 million users in its first years, while Mobike has now gained more than 10 million unique users and bicycles in 21 cities.
Inspired by their success, at least 10 other companies have jumped into the market, launching their own app-powered, vibrantly colored fleets in quick succession. But Mobike and ofo are far ahead of the pack. After Mobike raised more than $300 million in funding in the first months of 2017, ofo announced $450 million in fresh capital this week, from investors such as ride-hailing company Didi Chuxing and CITIC’s private equity arm. But according to December data from iResearch, a Chinese research shop, Mobike still leads the industry in weekly users, numbering over 4.5 million, compared with ofo’s 1.4 million.
Business models: Mobike and ofo
The two industry leaders each take a different approach to a similar concept. Mobike’s roster of co-founders includes former Uber general manager Davis Wang 王晓峰, now Mobike’s CEO. Like Uber, the Mobike app uses GPS to display bikes’ locations to users. They can use the map to reserve a bike and walk over to it. A scan of the bike’s QR code unlocks the bike, and when users manually lock the bike at the end of their trip, the app registers the trip’s end and the bike will pop back up on the map as available. Equipped with this wireless technology and other design features like a basket, orange rims, and airless tires that can’t be punctured, Mobikes cost between 1,000 and 3,000 yuan (about $145-$436). Rides cost 1 yuan ($0.15) for an hour or a half hour, depending on whether a user chooses a “Lite” or regular bike, and the deposit required to subscribe to the service is 299 yuan (about $43).
Ofo, meanwhile, is dedicated not just to producing its own bikes, which have slim yellow bodies and cost about 250 yuan ($36), but also to connecting existing bikes to its network — a philosophy that harkens back to the company’s formation. In early 2015, then applied economics graduate student Dai Wei 戴威, now ofo’s CEO, called on fellow students at Peking University to volunteer their bikes (and let them be painted yellow) as part of a campus bike-share program. The 2,000 bikes volunteered were the first iteration of ofo. Yet the majority of the company’s bikes are currently ones that have been specially manufactured and fitted with their lock system. Unlike Mobike, ofo bikes themselves are offline; their locations are tracked through users’ cell phones. Users find a free bike, enter the license plate number into their app, and receive the bike lock combination. When they’ve reached their destination, they end the ride on the app and manually lock the bike. Rides cost 1 yuan for an hour and the deposit is 99 yuan ($14).
The viability of business models and which companies will last long-term appears far from settled, but the present impact of the bikes in China’s urban centers is highly visible. In major cities like Shanghai, Beijing, Shenzhen, Chengdu, and Guangzhou, you can see bikes from these companies everywhere, and new bikes, either upgrades or forerunners from new brands, are regularly dropped off at street corners overnight. Riders can be found at all hours pushing pedals down bike lanes on larger roads or meandering along the quieter streets.
“It’s a new thing, and we love new things, we’re young people,” said Shanghainese banker Charles Zhang, 33, who tried the bike for the first time on a sunny day off in February. But as to whether interest in the bikes will last, he replied, “The current phase is driven by curiosity.”
Nurses locking up shared bikes, and other problems
While these new bike networks are innovative and convenient for commuters, maintaining the bikes has its challenges. Problems range from brute bike theft and vandalism to the defacing of Mobike QR codes, which make them unusable.
The China Daily recently reported that two nurses in Beijing were arrested for putting their own locks on two ofo bikes. Some new bike-sharing companies appear to have no clue what they are doing, there have been allegations of people putting needles on the saddles of the shared bicycles’ saddles (report in Chinese), and the government has started to worry about possible financial malfeasance in the use of deposits that bike-share users give to the companies. And is there too much irrational exuberance on the part of investors in these companies? The respected China commentator Bill Bishop recently tweeted: “The China bike-share bubble is a thing to behold. How are the entrepreneurs siphoning off cash from the investors?”
Additionally, just like car-hailing services such as Uber and Didi Chuxing, the bike-sharing services are facing opposition from local governments. This series of photos shot by drone, for example, shows thousands of bikes confiscated by the Shanghai government because they were parked illegally. (Interestingly, the images also illustrate the market share of the two major players — look at the photos: The orange ones are Mobike bicycles, the yellow ones belong to ofo.)
The last mile
But whatever the problems, the bike-sharing companies are developing a real community of loyal users. Convenient (方便 fāngbiàn) is the word most bike-sharing customers in Shanghai interviewed by SupChina used to describe the new services. One important reason for that is that the ubiquitous bikes are uniquely suited to solve the “last mile” problem facing many commuters who use public transportation but need to walk for 10 or 15 minutes to get to their train or bus stop. With access to a bike at both ends of their commute, transit becomes much more efficient.
This was the case for 4 out of 10 riders surveyed in Shanghai on a recent weekend, each saying that the bikes saved them 5 to 10 minutes on at least one side of their commute via bus or train.
“When I get off the subway to go home, I will try to take a bike every time,” said Sun Zhen, 20, a waiter. Sun says his workplace is a 40-minute subway ride, followed by a 10-minute walk from his home, which is located at the end of one of Shanghai’s subway lines. Hopping on a bike at the end of a shift makes that last stretch a lot easier. “It’s convenient for my everyday, and I don’t need to buy a bike for myself — I don’t have space to park my own bike at home,” he added.