Two bikes, one app
Users discuss how they would feel if share-industry giants ofo and Mobike merged
“Iwant to ride my bicycle; I want to ride my bike. I want to ride my bicycle; I want to ride it
where I like,” goes a famous song by an iconic English rock band, Queen.
A wish expressed less than 30 years ago has now come true in China with shared bikes. If Queen came to Beijing today, hundreds of thousands of twowheeled transports are readily available with a touch of your fingertip and a mobile phone. An innovation made in China, but is it really a child born to the family of the sharing economy?
The sharing economy is known for their disruptive business models. Thanks to the digital revolution, they can reinvent an existing service and completely change the status quo in that market. First, they offer low prices to draw customers. When the market is saturated and customers are used to the new and convenient service, they raise the prices. Customers will stay loyal because, at this point, there is no real alternative with the same quality of service.
It is true that shared bikes are disruptive, but they do not actually belong to the sharing economy – they are a standard B2C (business to customer) service. Users do not share their own bikes, such as with Didi or Airbnb, where users provide their own cars and apartments. This is why “on-demand” bikes may be a more suitable name.
Nevertheless, they turned the urban transport sector upside down, especially in Beijing, a city well known for its “nine million bicycles.”
The bright orange Mobike and the canary yellow ofo are the leaders of the market. Other competitor’s bikes are adorned with colors more numerous than the rainbow, but they share only five percent of the market among themselves. Their battle to win over new users has been lost as the bike-share giants can offer free rides and hongbao (red envelopes filled with money) to their customers.
However, earlier this month, market rumors about a merger between Mobike and ofo have intensified. “Mobike and ofo could only become profitable if they merged,” said Zhu Xiaohu, an investor in ofo in a report by online news platform Huxiu in Spetember. So far, ofo has declined to comment on the issue, but Mobike officially denied such plans.
The primary investors behind ofo and Mobike are Internet giants Alibaba and Tencent. These holdings have a history of investing in competing app services until they merge into a powerful quasi-monopoly that pushes other competitors out of the market.
For example, the food and restaurant listing apps Meituan and Dianping are now a single company.
Another example in the transport sector is the taxi apps. When they emerged, they competed with traditional cabs and among themselves for clients, so the prices were low. But then, Didi Dache and Kuaidi Dache merged forming Didi Chuxing. The combined power was so compelling that they soon swallowed Uber China as well. Now being in a monopoly position, they can raise prices according to the demand. During the weekends and rush hours, a Didi is more expensive than a traditional taxi.
The users of on-demand bikes might face a similar situation in the future.
But how do both Chinese and foreigners in Beijing feel about a merger between Mobike and ofo? Do they support or oppose the bike-sharing services? And how do they see the Chinese companies’ international expansion?
To better understand the user’s attitudes toward an eventual merger, the Metropolitan recently visited the Tsinghua campus in Beijing to interview international and local students.
Two become one
Pakistani Mudassir Syed, an engineering doctoral student, is a “frequent user of Mobike.” The 31-year-old student thinks that riding a Mobike is more comfortable than an ofo. However, he is a fan of the on-demand bike services in general. “We frequently travel outside (campus), so we just grab a Mobike and go anywhere we want to.” Syed is in favor of Mobike and ofo joining forces.
“If they can provide a better service, I think it would be a good decision for the companies to push,” he explained.
Chinese national Li Meihui, who just started her first year at the university, uses ofo more often than Mobike. “I have no money on my Mobike account,” she explained, adding that she prefers using bikes on-demand than owning a bike. “That way you don’t need to worry about where to park it safely.”
The young woman also wants ofo and Mobike to merge. “So I can scan both bikes with one app!”
American Jordan Schneider, 27, a medical history student at Peking University, is very enthusiastic about ondemand bikes.
He said, “They are the greatest thing China has ever created, far superior to paper, gunpowder and all the other past inventions. Nothing can compare to the impressive and mind-blowing impact of the on-demand bike business model.”
A “city plague”
However, not all the students feel so positive about the home-grown Chinese innovation.
Issameldeen Elfadul from Sudan is
not a fan of Mobike or ofo, in fact, he prefers to own a bike. His metallic-blue slim city bike takes him everywhere on campus and beyond. He said, “Why should I pay a 200 ($30) or 300 yuan deposit when I can get a new bike, or perhaps a second-hand bike, for the same price?”
The 30-year old is here on a scholarship from the Chinese government, getting an MBA. Regarding the merger, he suggested that the companies should reduce the amount of the deposit so that people will prefer the rental service over their own bike.
Australian national Luke Pegrum, who is majoring in journalism at Tsinghua, used to be a loyal ofo client. “Walking takes me 20 minutes, a taxi takes half an hour and a bike only takes five minutes,” he explained.
“But then they got a little weird,” he said, referring to ofo. “They always seem to be broken.” Now he mostly uses Bluegogo, a Beijing-based startup, which he said to be “better than both, Mobike and ofo” and “easier to ride.” He said the only problem is there are not many of them.
What Pegrum does not know is that this company recently had trouble refunding deposits and struggled with the oversaturated market, daily news outlet SupChina reported. The fierce competition in the on-demand bike rental market naturally pushes some players off the field, an effect that may multiply in the case of a merger of giants Mobike and ofo.
Chinese Hu Linhao, 28, a business student, said that Mobike and ofo help to conveniently pass the last mile of a commuter’s destination. But he believes that the bikes dumped at subway entrances and on sidewalks have grown into a “city plague.” For him, a merger could be the solution to this problem.
“It could prevent some unnecessary competition. Resource allocation will be more reasonable. It may even help Beijing with its congestion problem,” he said.
Chinese Yu Yu, 22, supports a merger as well. “I think it is an excellent thing. After they are merged, the scope of use will be more extensive,” she said. Yu often grabs an ofo for short-distance travel.
Li Xinming, an 18-year-old freshman from China, agrees that a merger would improve the user experience of the shared bikes.
“Sometimes you can only find Mobikes, sometimes there are only ofos. When the two companies merge, you have more bikes available,” he explained.
Going global, gone wrong
But there are some who think a merger might not be the best idea.
Pegrum expressed mixed feelings about the issue.
“I wonder if this is how the craziness of the past year will end. There are so many of these bikes. I guess it’s only natural that some companies will die,” Pegrum said, adding that he expects a similar outcome as for Didi users - rising prices.
“You lose some of the advantages of the competitive market,” he concluded. Schneider agreed. “The market can decide where it wants to go. At the same time, competition is exciting and good. What happened with Didi was that once they merged and once Uber evaporated, the prices went up. I’m assuming that is going to happen as well if Mobile and ofo join together,” he said.
Recently, Chinese on-demand bike companies have decided to expand globally. But the service is not well received by all city counsels across the world. The German newspaper Die Zeit reported an “invasion of the China bikes,” which caused chaos in German cities.
In the US, there seems to be a similar issue.
“The cities have been reluctant to let them put a large amount of bikes on the streets. So, I think in all of New York City, there seem to be 400 Mobikes,” Schneider said. “But hopefully, they will get more popular, so when I go back to the US, I will not have to dock my bike in one of those horrible docking stations.”
Pegrum said that in Melbourne and Sidney, the Chinese bike-sharing system had some of the same problems as in Beijing.
“People are leaving the bikes where they shouldn’t and a lot of them are ending up in the river. Perhaps Australians don’t protect public property as much,” he said jokingly.
In the end, only one question remains unanswered: What does Queen have to say to all of this? They’d probably not bother about which company to rent a bike from, as long as they could have a bicycle race.
“Bicycle races are coming your way, so forget all your duties, oh yeah! Fat bottomed girls, they’ll be riding today, so look out for those beauties, oh yeah!”
More bikes available, but higher prices? Users discuss the pros and cons of a possible bike-sharing merger.
Hu Linhao Issameldeen Elfadul Jordan Schneider Li Meihui
Nothing can compare to the impressive and mind-blowing impact of the ondemand bike business model, said a fan of both ofo and Mobike. Büchenbacher/GT, IC
Li Xinming Luke Pegrum Mudassir Syed Yu Yu Photos: Katrin Büchenbacher/GT