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June 29, 2017

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China’s bike-sharing spearheads overseas

WITH leading bike-sharing companies gearing up for global expansion, China’s innovation in on-demand transportation has surprised the world with a business model that stands out in the sharing economy.

Mobike, one of China’s largest dockless bike-sharing operators, will launch an initial 1,000 bikes in Manchester and Salford today, making Britain the latest in a string of overseas markets that Chinese bike-sharing companies have entered, including the United States, Singapore and Kazakhstan.

China is “the world leader in on-demand transportation,” representing 67 percent of global market share, according to the 2017 Internet trends report delivered by Mary Meeker, a partner of US venture capital firm Kleiner Perkins Caufield & Byers.

In particular, on-demand bike transportation in China is second only to cars. Two-thirds of bike riders use bike-sharing programs three or more times per week, the report shows.

Huang He, a professor at School of Business of Yeshiva University in the United States, stressed that the surging growth of China’s bike-share should be attributed to young people’s entrepreneurship, abundant capital from angel investors and strong support from the Chinese authorities.

However, Mobike, its most successful domestic competitor Ofo, and BlueGoGo have met with some common challenges in the European, US and Singaporean markets, where traditional bike-sharing companies with docking stations have gained market dominance.

In Europe, more than 550 cities have bike sharing systems. US operators Bicycles/SoBi and Motivate for instance also started to look at the European market.

Compared with shared bikes with docking stations, dockless bikes allow users to simply pick up or park a bike anywhere on the street, instead of at designated docking points.

However, many local city officials and transportation advocates overseas have expressed rejection to the station-free bikes, for fear that the bikes would be parked disorderly, leading to congested sidewalks or obstructed streets and bringing new burdens to local transportation departments.

Transportation Alternatives, a New York-based non-profit organization aimed at promoting non-polluting and city-friendly transportation, issued a statement in April, claiming that New York city must proceed carefully on dockless bike share.

“We also cannot allow other bike share operators to conduct business in a way that leads to obstructed sidewalks, public nuisance, and a damaged reputation for bike share in general,” said the statement.

Industry insiders also stressed that bike-sharing companies should pay adequate attention to every city’s unique characteristics when they try to seek market share.

“Every city has its own characteristics ... different needs, different topography: hilly or not hilly, and also the community you are getting into is important,” said Nicccolo Panozzo, Smarter Cycling Project coordinator at the European Cyclists’ Federation.

With the same awareness, Mobike announced it would work with Manchester and Salford city councils as well as Transport for Greater Manchester to monitor and push for orderly use of its bikes.

“We need to take a lot of time to make a foreign city believe that a Chinese company is able to operate bike-share well,” founder of Mobike Hu Weiwei said, adding that the company needs to learn how to deal with local governments.

Relevant data on users’ travel patterns will be shared for better city planning, which Hu indicated can be credited to an integration of the Internet of Things, cloud computing and big data technology.

Mobike has also rolled out some localized measures to meet Manchester’s regulations. For instance, the initial batch of bikes set to arrive in Manchester will be equipped with head lamps and rear lamps. Local riders can also use credit cards to pay for the bike rent through Mobike’s smartphone app.

Similarly in Singapore, Ofo, with about 6,000 dockless bikes and 100,000 registered users so far, launched a localized version of its typical yellow bicycles last month. The new version features smart locks that can be used in multiple mobile communication modes, which provide support for data collection used for the allocation of bikes in the country.

To get accustomed to the rainy and humid climate of Singapore, the new type of Ofo bikes are equipped with anti-rust and anti-corrosion locks made of aluminum. Improved damping device is also added to fit the mountainous landscape of the country.

Quite a few investors and observers have noticed that Chinese innovations and business models have been spreading to the rest of the world, such as the United States, India and Indonesia.

A recent report by the Wall Street Journal quoted a US venture capitalist as saying that some US tech companies, like Apple and a startup called LimeBike, have provided “services, such as mobile wallets ad bike-sharing apps, that imitate those offered by Chinese rivals.”

Mobike just announced that it has raised over US$600 million in a Series E financing round led by China’s Internet titan Tencent, the largest in global bike sharing industry to date. Now, the company’s total funding has reached nearly US$1 billion.


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