Apps for Bicycle sharing are huge in China Customers use an app to release a bike’s lock for rides costing as little as 1 yuan (15 cents) an hour. Bikes can be left anywhere for the next user.
Beijing Bikelock Technology Co. cycle-sharing startup, known as Ofo, won about $100 million backing in September, 2016 from investors including the venture fund backed by Xiaomi Corp. founder Lei Jun and Didi Chuxing, the ride-hailing giant that just beat Uber Technologies Inc. out of China. The funding is said to have valued the startup at $500 million.
Another company Beijing Mobike Technology got funding from a group including Tencent Holdings, China’s biggest internet company and, ironically, a long-term backer of Didi. Chinese bike-sharing start-up Mobike has closed a $215 million series D funding round led by Tencent Holdings and Warburg Pincus LLC.
Bike-sharing is hardly new. There are about 600 such operations globally, with a market that could grow by 20 percent a year to generate as much as $5.8 billion in revenue by 2020, according to consultancy Roland Berger.
Most, like Paris’s Velib or London’s so-called Boris Bikes are run or set up by the local government, often with corporate sponsors, and bikes are available from racks at set locations. What differentiates Ofo and Mobike is that users find and pay for bicycles via a smartphone app and then leave the vehicle wherever they want.
Mobike has gone for high-end branding with bikes that cost as much as 3,000 yuan ($440) to build and have snazzy orange wheels, solid-core tires and satellite navigation. Ofo is targeting students with bright yellow two-wheelers costing only about 250 yuan ($40) that don’t have GPS and rent for just 1 yuan per hour, typically half that of Mobike. Beijing’s public bikes are free for the first hour and then 1 yuan per subsequent hour.
Mobike locates its vehicles via an integrated GPS. Ofo — so-named because the word looks like a bicycle — does so by tracking the smartphones of its riders and sending a code to unlock the bike.
Mobike said it has about 30,000 bicycles (Oct 2016) spread across the major cities of Beijing, Shanghai, Guangzhou, and Shenzhen, which have an estimated combined urban population of more than 74 million. It was planning stock at least 100,000 bikes by the end of Dec 2016 and expand to other cities.
Compare that with the more than 66,500 public bikes offered by the public transport corporation of Hangzhou, a city of about 8 million.
Ofo says it has more than 85,000 bikes (Oct 2016), mostly on university campuses, and expects to take its service to other places in China. Both rivals are eyeing markets in Europe. by Jan 2017, Ofo claimed 10 million users for its one million bright-yellow bikes in 33 cities. It plans to add 10-15 million bikes in 2017.
Bluegogo is adding 70,000 bikes per month.
The ride-sharers are trying to reverse a decline in cycling in China, which spent the past two decades promoting cars. China had 670 million bikes in 1995. By 2013 it had 370 million.
The new approach to bike sharing can solve the “first-mile/last-mile” problem that has long plagued urban planners: how to move commuters between their homes and public transit.
For some Beijingers, the billion-dollar fight between Ofo and Mobike comes down to which happens to be more convenient.
“I don’t care whose bike it is, I’ll use one if I spot one and feel too lazy to walk,” said Guang Geng, who works in the Zhongguancun area. “Honestly I just tell them apart by color.”