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Spinning the Wheels
An old Chinese icon, the bicycle, has made a top-gear comeback on the wings of hi-tech
By Yuan Yuan | NO. 17 APRIL 27, 2017

Ofo bikes parked at a subway entrance in Fuzhou, Fujian Province, on March 29 (XINHUA)

About three decades ago, the bicycle was a national icon of China, and China was dubbed the "bicycle kingdom." Now the contraption is back on the streets but in a chic and smart way.

Scan, unlock and ride—riding a bicycle in many places is as simple as that. You no longer need to own a bike. Bikes for rent are available almost everywhere in the major cities, ready to go anywhere at any time.

Unlike the traditional bike rental service, these bikes don't need to be left at a fixed docking station or to be picked up from one. Once you reach your destination, you can simply leave the bike there. It will be taken by another borrower from there or be collected by the company.

Each different color indicates a different bike-sharing company. All financial transactions are done on e-payment platforms.

Bike-sharing services began to boom in the top-tier cities in the latter half of 2016 then spread to medium and small cities.

"Out of 10 bike riders on the streets at a given time, seven are riding shared bicycles," a user in Beijing, going by the surname Zhong, said. "I can't live without [the service] now. It is super convenient."

A visitor rides a Mobike inside Universal Studios Singapore on April 3 (WANG YAJUAN)

How it started

When Ofo, the first bike-sharing service provider in China, debuted on college campuses in 2014 for students to commute between dorms and classrooms, the company didn't imagine it would become such a rage.

Its co-founder, 26-year-old Dai Wei, had just graduated from Peking University with a master's degree in economics. "Bicycles are best for commuting on campus, but as they were frequently stolen, many students chose not to buy one and to walk instead," Dai said during an interview with Sohu.com. "We wanted to do something to change the situation."

Together with another two Peking University Cycling Association members, Dai founded Ofo. After hitting a few speed bumps in the early stages, a Peking University alumnus was impressed by the idea and agreed to invest.

Their initial plan was to collect spare bicycles on campuses and share them among students, but this proved to be hard to manage. They then decided to design and make their own bikes. These bikes are painted in bright yellow, and each one is equipped with a QR code, a unique license plate number and a keypad lock. Users scan the QR code to get a unique digital code to unlock the bike.

The yellow bikes soon became popular among students and spread to other campuses.

Hu Weiwei, co-founder of Beijing Mobike Technology Co. Ltd., the arch rival of Ofo, is a former journalist who started her business later but planned it bigger.

"When I was traveling abroad, it was not always easy to rent a bicycle," Hu said in a video lecture. While in Europe, she saw some bikes for rent at docking stations and tried to unlock one but could not.

"I couldn't understand, when everything in our life is getting smarter, how come we still have to put up with this outdated way of bike rental?" Hu said.

After talking to some friends who also wanted to do something about this, Hu decided to start up her business in shared bikes. "China has great demand for bikes, especially in big cities, which are suffering from heavy traffic congestion."

Getting the bikes easily and parking them easily is the principle. To achieve this, each bike is installed with a GPS transmitter so that users can track them with a phone app and reserve one. The reservation is valid for 15 minutes.

However, all this has increased the cost. A Mobike bicycle costs over 2,000 yuan ($290.5), while an Ofo bike is only 270 yuan ($39.2). The deposit for using the Mobike service is 299 yuan ($43.4), three times that of Ofo.

Mobike was first launched in April 2016 in Shanghai and then spread to Beijing in September of the same year. The chic design and vivid orange color soon attracted young followers in droves.

"I first came to know of Mobike through WeChat, where more and more friends were sharing their experiences and pictures of riding a Mobike," Yang Xinran, a 26-year-old Beijing local, told Beijing Review. "It was like a new fashion overnight."

Yang began using Mobike, and to her surprise, her mother also followed suit. "My mom has become a more avid user," Yang said. "She gets one every day to go to the vegetable market [two bus stops away]."

Before Mobike, she had to shop at the small store in their building.

"She is super happy with the yellow and orange bikes," Yang said. "She downloaded both apps of Ofo and Mobike and chooses one randomly."

Ma Jie, a Tianjin local, is also a frequent user of shared bikes. "There are no direct buses from my apartment to my office, and getting a taxi every day is expensive," Ma told Beijing Review. "Commuting was a headache but the bikes have perfectly solved this problem."

Now she rides these bikes twice every day. In March, while taking her wedding dress photos, she was inspired by the rows of Mobike bicycles nearby to include them in the photos. "Shared bikes are an icon of our times, and I wanted to record the trend in this sweet way," Ma said.

She posted her photos on Weibo and was lauded by Wang Xiaofeng, CEO of Mobike.

"Usually, it takes a long time for consumers to embrace new Internet-connected products. But this time, we markedly shortened the process. We built a network of more than 1 million connected bikes within just 300 days," Wang told China Daily. "This is a home-grown innovation."

By January 2017, Mobike said it had more than 5 million users and had secured a D round of venture capital worth $215 million. Premier Li Keqiang once met Hu and praised the new business innovation.

Mobike spokesperson Huang Xue said several factors have helped to make China ripe for a bike-sharing boom.

"China used to be a kingdom of bicycles. In the 1990s, when I was young, there were bikes everywhere," Huang told Xinhua News Agency. "Given the fact that the population is already well-trained [to ride bikes], they're just looking for something more convenient."

A survey of about 100,000 residents in 36 cities reported a 55-percent decline in trips by car and a 53-percent decrease in unlicensed motorcycle trips after shared bikes became available.

Mobike establishes an open research center with other 11 institutions on April 12 to work on urban planning, with a focus on lanes and parking spots for shared bikes (XINHUA)

The sword's edge

But the picture is not all happy.

Soon after the bikes were launched, some were damaged badly, and some simply disappeared. Images of bikes piled up in dumpsters, ditches, rivers and even on trees began to appear regularly on social media.

In Putian, Fujian Province, a shared bicycle service company distributed 667 bikes before February, and 550 went missing.

Du Zhiming, a bike repairer with Ofo, told Beijing Review that he repairs about 70 to 80 bikes a day. Sometimes the number jumps to 100. "We are striving to put the bikes back on the streets," Du said. "Many of them are vandalized on purpose."

Beijing TV reported a case of a Beijing resident who had appropriated an Ofo bike, repainted it from yellow to black and even attached a baby seat to it. He was discovered and detained for two weeks.

Fraudsters have been reported gluing their own payment codes to rental bikes so that when any money was transferred, it went to them and not the company.

Cases of misuse by children are also on the rise. Youngsters have been seen racing on rental bikes in the streets, when children under the age of 12 are barred from riding bikes and tricycles on roads.

However, Mobike's Wang Xiaofeng called the cases isolated and over-exaggerated. "We have taken a range of steps to prevent such cases, starting from product design," Wang told China Daily. "Our name verification system and credit system help solve this problem. Our bikes have a very low damage rate."

More regulation needed

In March, a 31-year-old Beijing resident sued Ofo after he was seriously injured in a bike accident. He said the bike he had rented was faulty and demanded compensation. It was the first court case against a shared bicycle service in China.

"Bike sharing is a greener method of transportation and provides a user-friendly experience," Liu Xiaoming, Vice Minister of Transport, said. "But it is a combination of online and offline businesses. Operators are usually strong in online services, but lack offline business experience, which causes problems."

In addition, with the companies continuously putting out bikes, the streets are getting jammed. The "parking anywhere" policy is both a blessing and a curse. Randomly parked bikes, especially near subway stations, have been known to block the roads for other traffic.

To resolve this problem, Mobike and other companies have volunteer users to spot and report discarded bikes. They also have in-house teams for rounding up those bikes and taking them to either high-traffic hubs or repair centers.

Wang Yongjun is a car park attendant at a Wanda Plaza in Beijing. "Since February, more shared bikes have been parked at the plaza," the 46-year-old said to Beijing Review. "I contacted Mobike and volunteered to help them regulate the bike parking."

Mobike repaid him by giving him some free coupons, he said.

"Bike sharing is a new thing. It takes time to formulate relevant policies and laws to guide the industry," Wang Xiaofeng said to China Daily. "We welcome the government to play an important role in that." Mobike has announced its plan to establish an open research center with 11 other institutions for urban planning, with a focus on lanes and bike parking spots.

Dai with Ofo echoed Wang Xiaofeng, saying that bike sharing companies should cooperate closely with the government,

assisting it in making industry standards and setting up parking points.

On March 15, the Shanghai Municipal Transportation Commission reportedly told six bicycle-sharing service providers, including Mobike and Ofo, to stop putting out more bicycles, since there were already too many.

On April 15, the police in Shenzhen, Guangdong Province, revealed that they are partnering with bike sharing companies to monitor the number of bikes in designated areas.

Under the plan, if the accumulation of bikes in an area hits a certain number, a warning system will be activated that prohibits bikes from entering, with cyclists notified via a mobile app.

Going abroad

Since Ofo's foundation, Dai had the idea of introducing shared bikes to college campuses overseas.

"The last-mile trouble exists in many countries in the world, and this is a chance for China's home-grown innovation to go abroad," Wang Xiaofeng told Sohu.

Late last year, Dai announced that Ofo plans to ship 20,000 bicycles abroad, choosing three foreign destinations for the company's global market: Cambridge in Britain, Singapore and Stanford University in the U.S.

But before Ofo officially hit overseas markets, Bluegogo, the third largest player in the Chinese market, became the first to expand internationally, launching a San Francisco service in January and then started their preparation for market expansion into Australia.

On February 21, Ofo officially launched its bikes in Singapore. On March 21, Mobike started its first steps overseas. The bikes are mostly placed around the MRT stations and on university campuses in Singapore.

Apple CEO Tim Cook paid a visit to Ofo headquarters in Beijing on the same day. Claiming himself to be a cycling lover, Cook rode an Ofo bike, saying the startup has changed public transportation.

"We could say this is the first time for Chinese Internet companies to be pioneers in a new tide of innovation, which is defined as solutions for challenges and problems," Dai said.

"It is a systematic project to march into an overseas market. It means far more than just throwing bikes into foreign cities," Wang told China Daily.

Wang revealed that they registered a company in Singapore last August, but spent months partnering with local banks, transportation partners and authorities.

Singaporeans don't use WeChat and Alipay, which are used in China for the e-transaction. They need to seek out a local way.

Ofo has the same problems in exploring its overseas markets. The bikes they launched in the United States don't have a QR code, and users need to input the registered number of the bike to get the unlock code through the Ofo app.

The challenges also include adapting to the local rules and regulations as well as local culture. "Ofo has been busy exploring a localized model," Dai said.

The Two-Wheel Deal

Currently, there are about 30 bike-sharing service companies in China, the majority of them founded in 2016. The number of bike-sharing users has rocketed, reaching 19 million by the end of last year. It is expected to surge to 50 million in 2017, according to BigData-Research, a research firm based in Beijing. Bike-sharing companies are awash with investment from venture capital firms to bankroll their expansion plans. Mobike has enjoyed seven financing rounds since it was founded in late 2015. The first investment was several million dollars. In August 2016, the company raised more millions. After about one month, it got another $100 million investment in its C round of venture capital funding. In January and February this year, Mobike secured two more venture capital rounds totaling about $300 million. Its investors include Singapore sovereign wealth fund Temasek and iPhone maker Foxconn. Its archrival Ofo is also at the center of the spotlight. After attracting millions of dollars in late 2015, it got $130 million in October 2016 from investors including Xiaomi and Didi Chuxing, the ride-hailing service that acquired Uber's China division. On March 1, Ofo announced it had closed an additional financing round totaling $450 million. Bluegogo, a Tianjin-based bike-sharing service launched in November 2016, secured its first financing round of 400 million yuan ($59 million) on February 24. Bike-sharing firms are burning the raised funds at a crazy speed to gain more market share, as they battle one another by offering subsidies and free rides. Mobike is offering 110 yuan ($16) to users for every 100 yuan ($14.5) they deposit, a counterattack against Ofo's similar offer. The white-hot battle is reminiscent of Didi's jousts with Uber and about 30 other rivals several years ago.To borrow a shared bike, users need to pay a deposit. For the two major companies, Mobike and Ofo, it is 299 yuan ($44) and 99 yuan ($15) respectively. Users are told they can get their deposit back within seconds after they submit their request. By this January, both companies claimed to have more than 10 million users. That means from the deposits alone, they would have got 2.99 billion yuan ($434.2 million) and 990 million yuan ($143.77 million) respectively, and the numbers can only go up with the increasing number of users. However, there's been some controversy about whether such huge amounts are safe due to the suspected lack of supervision over their use.

Copyedited by Sudeshna Sarkar 

Comments to yuanyuan@bjreview.com 

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