Ride-hailing giant Didi Chuxing invests into bike-sharing startup
By Alex Linder
27 September 2016
After ruthlessly devouring Uber's operations in China, Didi Chuxing,
the country's top ride-hailing company, has moved on to its next target—bikes.
The company announced yesterday that it has invested "tens of millions
of dollars" into the bike-on-demand startup Ofo, which was launched on
the campus of Peking University as a student project back in 2014. The
two companies released a joint statement saying that they will
collaborate on product development, technology, data and business
While it's not clear what exactly that means, it's assumed
that Didi plans to help Ofo expand outside of college campuses by
eventually placing it on its own extraordinarily popular app.
Bike-on-demand services are becoming increasingly popular in China as
an alternative form of transportation that is more environmentally
friendly. In fact, Ofo currently has over 1.5 million users in 20
cities across China who take 500,000 bike rides per day.
Ofo isn't the
only app specializing in this competitive marketplace, but it is the
only one backed by Didi.
Xiamen completes world’s longest ‘cycling skyway’
By Alex Linder
24 January 2017
China has completed work on its first "cycling skyway." Surprise, surprise, it also happens to be the world's longest.
The 7.6-kilometer long "skyway" runs 5 meters above the road and just
below a bus rapid transit line in downtown Xiamen. It's targeted at
decreasing traffic congestion and promoting "green" forms of
transportation in the city.
Bicycles are once again becoming a more and more popular way of getting
around for China's urbanites thanks to the exploding popularity of a
few bike-sharing apps and the omnipresent traffic jams in Chinese
This is why there are huge piles of bikes in China
By Umer Sohail
21 January 2016
IMAGE: SILENT HILL/IMAGINE CHINA
Bike sharing business is big in China, especially after the smog
concerns that have been haunting the citizens for quite some time. But
in China, bike-sharing providers don’t work like the ones at New York’s
Citi Bike. You don’t have to place the bike in a dock. Instead, you can
simply find one with your app, ride it, and leave it by the curbside
when you’re done.
vandalizing, destroying or dumping of these
bikes after use
While this may be more convenient, there is a significant downside to
it. The vandalizing, destroying or dumping of these bikes after use is
a serious emerging issue. People have been rather careless with the
usage; leaving the bikes on the sidewalks without realizing that they
are blocking the sidewalks, and even causing traffic hazards due to
their callous attitude.
These astonishing pictures of massive piles of bikes in Shenzhen say it
all, as several bike-sharing startups have launched a rather creative
protest against the malpractice, They have stacked hundreds and
thousands of bikes on the street corners in the hopes of raising
awareness about the criminal attitude by the users.
IMAGE: SILENT HILL/IMAGINE CHINA
Florian Bohnert, CEO of Mobike which is one of the bike providers, said
that the pile is created with the help of a condo facility’s management
“The Shenzhen government is most proactive in supporting us…This kind
of behavior is isolated, but also criminal,” he said.
Nuisance caused by inconsiderate users, misuse, and theft, have been a
huge problem for the bike companies as well as the city administration,
who on Tuesday had to round-up bikes that were left by the streets and
walkways, blocking the sidewalks. The authorities also had to stop
selling the stolen bicycles from bike-sharing companies to minimize the
crisis, with many online marketplaces like Taobao also placing such
Social media has also been filled with people uploading pictures of
bikes thrown in the rivers or even up in trees.
IMAGE: SILENT HILL/IMAGINE CHINA
All these incidents have occurred even when the bikes from Mobike, ofo,
and Bluegogo are trackable through their GPS units. The companies do
take note of their inventory, including the bikes that get vandalized,
but they haven’t released any data on how many of them get destroyed
IMAGE: SILENT HILL/IMAGINE CHINA
And even though Mobike offers their users incentives like ride credits
for rescuing stranded bikes but the efforts to secure bikes are still
China’s “Uber for bikes” startups are being taken for a ride by thieves, vandals, and cheapskates
By: Echo Huang & Josh Horwitz
28 February 2017
Ofo and Mobike vehicles on the streets of Shanghai. (John Pasden/Flickr)
First it was the taxi-hailing wars. Then it was the on-demand service
wars. Now, China’s internet industry is watching another money-burning
battle unfold between rival startups.
Within the past year venture capital firms have poured hundreds of
millions of dollars into rival companies, all competing to become
China’s “Uber for bikes.” Their premise is simple: Pedestrians looking
for a lift can open their smartphones, unlock a bike parked nearby, hop
on for a ride, and pay a fee once they arrive at their destination.
It’s difficult to overstate how popular these services have become. On
almost every street corner in China’s major cities, bikes of different
shapes, sizes, and colors are lined up next to one another.
But widespread customer negligence and razor-thin margins could make it
hard for these businesses to stay afloat. The very factors that make
China’s bike-share services so convenient—low prices and ease-of-use,
namely—are the same factors that could spell their death.
“What they’ve got is a very interesting technology, but a basic
business model that makes no sense,” says Paul Gillis, who teaches
accounting at Peking University in Beijing.
Bike-sharing is not new, but Chinese startups have reinvented the concept to make it even more efficient.
Most bike-sharing schemes, like those in New York or Taipei, require
bikes to be parked into designated docks when not in use. There’s often
no way to know where these locations are, so riders have to plan out
their routes in advance. Or there might be a clunky app, perhaps from
the same government agency that funded the program.
China’s bike-sharing startups, on the other hand, allow their vehicles
to be placed anywhere in the city. Best-in-class engineers have
developed GPS-based apps that allow people to find nearby bikes, and
charge based on how much time riders spend on them.
Bullish venture capitalists funded rapid expansion, ensuring companies
have plenty of cash to buy bikes and put them on the streets. Prices
are dirt-cheap. After paying a small deposit through WeChat or Alipay,
two Chinese online payment services, 30 minutes on a bike will cost
between 0.5 and 1 yuan ($0.07 and $0.14), depending on the brand.
As a result, many Chinese have taken up bike-sharing as a replacement
for the subway, or even walking. Judy Zhao, a 25-year-old marketing
executive, tells Quartz that she takes the bus every day to work, but
as soon as she gets off at 5:30pm, she hops on a Mobike to cycle back
“It’s about 20 minutes to ride [from my office to home], so I only need
to pay 0.5 yuan (about $0.07),” she tells Quartz. “It’s cheaper than
Numerous companies have climbed onto the bike-sharing bandwagon, but
two startups lead the pack in terms of venture capital funding: Mobike
Mobike, which was founded in late 2015 by a former Uber China employee,
first grew popular in Shanghai and is now in 23 cities across China.
Investors have funded it at lightning speed: It secured two venture
capital rounds this year alone that jointly totaled about $300 million.
Its backers include Singapore sovereign wealth fund Temasek, along with
Foxconn, the manufacturing giant best known for making the iPhone.
Chief rival Ofo was founded in late 2014. It grew popular on college
campuses in Beijing before raising $130 million last October from nine
investors including Xiaomi and Didi Chuxing, the ride-hailing giant
that acquired Uber’s China division. On March 1, it announced it closed
an additional round totalling $450 million.
Inspired by Ofo and Mobike’s swift uptake in early 2016, rival
companies followed suit and a mini-bubble surfaced. About 30
bike-sharing companies (link in Chinese) exist in China right now, with
many founded in 2016. Five of those companies went on to raise
double-digit funding by year’s end, according to Chinese tech database
Mobike spokesman Xue Huang says that several factors have helped make
China ripe for a bike-sharing boom. For one thing, most of the world’s
bikes are made in China, which means they can go directly from the
factory warehouse to the streets. Roads in China’s major cities tend to
be flat and wide, and populations are dense. Most important, unlike in
other parts of the world, riding bikes around in China never really
went out of fashion. Until only recently, it was the predominant mode
of urban transportation.
“China used to be a kingdom of bicycles. When I was young in the ’90s,
there were bikes everywhere,” says Huang. “And given the population is
already well-trained [to ride them], they’re just looking for something
Riding on the honor system
While Mobike, Ofo, and their many rivals are easy to use, they’re
equally easy to abuse. The companies basically rest on the “honor
system,” and consumer negligence poses a serious threat to their
The “park anywhere” policy is a blessing and a curse. On the one hand
it increases the likelihood that bikes will be found in one’s immediate
vicinity. But it also allows riders to park their bikes in remote
locations with no nearby foot-traffic. As a result, bikes parked along
freeways are now a common sight in China.
Property managers, meanwhile have started to complain about bikes
taking up space besides private buildings, or blocking pedestrians on
the sidewalk. News reports of bike-share vehicles piling up in
dumpsters, ditches, rivers, and even trees (link in Chinese) make
regular appearances on Chinese social media.
Bikes being piled up in Shenzhen's Xiashan Park on Jan. 16, 2017.
To manage this problem, Mobike and other companies rely on volunteer
users to spot and report discarded bikes. But they have also hired
in-house teams specifically for rounding up these dispersed bikes, and
taking them to high-traffic hubs or repair centers. That costs money.
Uber and Didi don’t have to deal with this problem, since those
companies generally don’t own the cars connected to their apps.
Then there’s the problem of theft and vandalism. Mobike vehicles lock
and unlock when a rider scans the QR code attached to a bike. But many
people—perhaps employees at competing companies—will deface these QR
codes, rendering the bikes unusable.
The QR code that use to unlock the bikes are scratched sometimes.
Ofo bikes, meanwhile, unlock when a user scans the bike plate, receives
a four-digit password via smartphone, and then inputs the code into an
old-fashioned mechanical lock. But these mechanical locks have
permanent passwords. Users can simply memorize the password of a
particular bike, unlock the mechanical lock, and re-secure it using
their own personal lock. This lets users effectively steal the bike
after first use, and ride it without being bound to the app’s timer.
Recently, two nurses in Beijing spent five days in jail after they were
caught using this trick on Ofo’s bikes—though most such riders probably
go about unnoticed.
All of these factors merely compound the stress placed on an already
shaky business model. Mobike and its rivals won’t reveal how much their
bikes cost to produce, but an old estimate (which Mobike says has since
decreased) places the cost of a standard Mobike at 3,000 yuan (about
$437). Professor Gillis says that fares alone will hardly recoup these
costs in a timely manner—let alone cover labor and R&D expenses.
“They rent for one yuan every half hour, and they expect that they
might be rented four times a day for a half hour, which amounts to four
yuan per day,” he tells Quartz. “If you take four yuan per day and you
take that into the 3,000 yuan, you’ve got a long time before you’ve
recovered the cost of a bike.”
Profit-challenged Chinese internet companies have a habit of living
long lives once they get big, especially if a larger internet company
like Alibaba or Tencent acquires them. Mobike and Ofo have a lot going
for them. Like Uber and Didi, they collect lots of data about traffic.
More important, they align well with the central government’s
commitment to reducing pollution nationwide, as well as its ambition to
promote itself as a global innovator in technology.
The government won’t necessarily stay a friend for long. It’s already
begun to turn its back on Didi Chuxing, for instance, by issuing new
restrictions on driver eligibility, cutting the supply and making it
harder for customers to hail a ride. If Mobike and its rivals can find
a suitor quickly, they can perhaps live on comfortably as a loss leader
for a deep-pocketed parent company. But if not, or if the government
decides their popularity is chipping away at buses and subways, many of
the bikes lining China’s street corners might soon end up in the