Chinese bicycle sharing companies Mobike and Ofo rank among the country’s most successful start-ups, and have rolled out millions of bicycles to China’s cities. Mobike claims there are 2m rides per day on its platform in Guangzhou alone. …
They are quite unlike the bicycles my grandmother remembers. These are smart bikes, with about 300 patents involved in their production. They are unlocked and paid for in seconds with a scan of the bicycle’s QR code.
Mobike says it operates one of the largest Internet of Things networks in the world and is integrated into WeChat, China’s equivalent of WhatsApp. Both companies nudge their customers into using bicycles responsibly. Users receive points for parking inside a geo-fenced area, which are agreed with local authorities. and are lose them for parking in inappropriate spaces or damaging a bicycle.
This is changing urban transport in China – not just in Beijing and Guangzhou but also in the “tier two and three” cities that are unknown in the West but which drive much of the country’s growth. By helping people to connect quickly to subway or bus services, bicycle sharing companies are enabling a modal shift towards sustainable transport. The huge amounts of data the companies are collecting also helps city planners to adjust local transport routes to reflect passenger flows.
The growing uptake in cycling also has public health benefits in a country which is experiencing a growing obesity epidemic, but where exercise for exercise’s sake is often perceived as a distraction from professional or academic success. Unlike more expensive and geographically limited cycle schemes such as London’s Santander Cycles, these benefits do not appear to be disproportionately helping affluent young men.
This has all happened incredibly quickly. Ofo started as a project of students in the Peking University cycling club, and two years ago neither company had a bicycle on a public road. Now they are both worth billions of pounds, and are among the most high profile unicorns in China. According to a government think tank, as many one-in-10 Chinese adults have used a dockless bicycle.
Mobike and ofo have many of the competitive advantages of Chinese technology. First, the companies have access to significant capital from the biggest players in Chinese technology. Alibaba is the biggest investor in Ofo, and on 4 April Tencent-backed Meituan-Dianping (a food delivery giant) purchased Mobike.
The access to cash allows the companies to scale quickly without having to worry about turning an immediate profit. This scale is the key to attracting a large numbers of users in a city – with the ubiquity of the products reducing the need to spend on marketing.
Second, due to Chinese strengths in manufacturing, the bicycles are cheap to produce and require limited upkeep. This means that the companies can charge low fees for the rides after the customer makes an initial deposit. This makes bike sharing cheaper and more convenient than taking a bus.
Third, there is a huge home market. There are many large and densely populated Chinese cities with at least some public transport – fertile ground for dockless bicycle sharing. With the new-found popularity of 4G mobile internet in China (it only overtook 2G in late 2016) and digital payments, there is high demand for data-heavy apps.
The other big factor in bicycle sharing companies’ success is the surprisingly laissez-faire approach of the Chinese government. Until recently, the environment was a low concern for policymakers, and discussion of its cities’ pollution was discouraged. Beijing’s media even used to euphemistically refer to the toxic skies as “mist” or “fog”.
But as the environment became China’s biggest cause of social unrest, the government changed tack and began promoting more sustainable policies, as well as a more high tech economy. In this context, a home-grown technology based approach to greening China’s cities became a no brainer – particularly given dockless bicycle companies did not charge city governments for the service, as there is no infrastructure to install.
Both companies are now rapidly expanding internationally at an astonishing rate. In June 2017, Manchester became Mobike’s 100th city. Five months later in Berlin, they’d doubled their city count.
In London, Ofo says it aspires to operate 150,000 bikes – more than 10 times as many as Santander Cycles. With pollution and public health rising up the list of mayoral priorities, perhaps these smart bikes will become a permanent feature of European cities.