Sharing opportunities
Traditional bike makers see chance to grow as new industry emerges
Early Friday morning, hundreds of thousands of yellow bicycle parts were being transported to bike manufacturer Flying Pigeon’s assembly line in Jinghai district in North China’s Tianjin.
“Now, the plant is fully covered by Wi- Fi, which enables us to send updated product information to the operation and management system of Ofo,” Zhao Kun, vice general manager of research and development at Flying Pigeon, told the Global Times Friday.
In December 2016, Flying Pigeon allocated two assembly lines to fill orders from the Beijing- based online bicyclesharing company, Zhao said. Each line can produce up to 2,000 bikes a day.
“We have since hired 10 new workers for each line, and now one bike can be assembled within 15 seconds,” he told the Global Times Friday.
Ofo has put nearly 5 million bicycles onto the streets of 100 cities in four countries including the US, the UK and Singapore. Its competitors Mobike and Bluegogo have put out more than 4.5 million bikes and 600,000 bikes respectively.
The bike- sharing boom has meant big business for bicycle makers in Tianjin, the bike manufacturing hub of northern China.
“As orders rise, many manufacturers have been rushing into this sector since 2016,” said one local manufacturer who preferred not to be named.
Wangqingtuo town in the western suburbs of Tianjin is known as the “kingdom of bicycles.” Almost every household’s livelihood depends on a bicycle- related business, the local manufacturer said.
“From parts production to assembly, you can find everything related to bicycle manufacturing here,” he told the Global Times Friday.
The town had been struggling before bike sharing became a business. For years, the local bicycle industry had been in decline as orders fell, Web portal qq. com reported in March. The bike- sharing start- ups changed that. Now, workers are busy day and night at the town’s bicycle factories.
In 2016, China’s annual bicycle production fell 5 percent year- on- year to 53 million bikes, according to a post published on the central government’s website in February. However, annual sales revenue rose 1.1 percent to 26.29 billion yuan ($ 3.8 billion).
Now, domestic bike manufacturers see business opportunities as bike sharing has put the country back on two wheels, said Wang Chenxi, analyst at the Beijing- based consultancy Analysys International.
New opportunities
A representative from industry group China Bicycle Association took issue with the notion that bike sharing has been either good or bad for the entire bicycle manufacturing industry.
It is simplistic to say Ofo and Mobike ignited a revival across the entire industry, said the representative, who preferred to remain anonymous.
“We encourage new things. We should, however, also be aware of their impact on the traditional manufacturing sector,” she told the Global Times Monday.
Although some factories are now aiming to produce more bicycle for bike- sharing companies – as the cost of making a single product is lower than producing a range of products – some large and mid- sized factories have dedicated only a small portion of their production capacity to making bicycles for bike- sharing start- ups.
“For one thing, tech firms like Ofo and Mobike need to find suitable contractors to ensure the quality of shared bikes they put into the market,” the industry representative said. “For another, traditional manufacturers can learn more about the shared economy, which is driven by Internet penetration and will push them to come up with new business ideas.”
As more and more bikes end up on the street, some markets will become saturated, “but the risks for manufacturers are controllable,” Li Jing, deputy general manager of Flying Pigeon, said at a press conference in the factory Friday morning.
“In addition to [ working with] Ofo, we have been shifting our focus to making high- end products, especially innovative ones,” she noted.
Orders from bike- sharing companies accounted about 30 percent of the total output of Wolf Bike, said He Weiji, a senior executive at the bike maker, which is based in Wuqing district in the northern suburbs of Tianjin and was established in 1980s.
Wolf Bike’s factory has been making bicycles for the bike- sharing start- up Bluegogo for several months, He said. The manufacturer can produce about 2,400 bicycles for Bluegogo every day. So far Bluegogo’s orders have amounted to about 200,000 bikes.
However, Wolf Bike produces about 900,000 bikes a year. “The rest of the bikes are for sale in China and foreign countries,” He told the Global Times Friday. “A large number also get exported to Thailand.”
China has become the world’s No. 1 bike manufacturing country. A total of 80 percent are produced for foreign companies through Chinese original equipment manufacturers, according to a research note from market research firm Daxue Consulting in May 2016. The remaining production is mainly sold through stores around the country.
Rising competition
Because bicycle manufacturing is a labor- intensive industry with a low threshold to entry, a capacity glut is a real danger, said He, who has been working in the bike industry for more than a decade.
“As new players join the game, [ the bike- sharing companies] have higher requirements for traditional manufactur- ers,” he said. “In the short term, it may create more jobs, but in the long run, it will force out some low- end production lines.”
There are more than 10,000 factories in the bicycle production supply chain in and around Tianjin, the local industry representative said.
To give their users a better experience, the bike- sharing companies have been enhancing their bikes with advanced technologies such as positioning technology and smart locks.
Some contractors have invested hundreds of thousands of yuan in production testing facilities.
“We’re planning to invest more than 2 million yuan in further research and development. We don’t want to be just a contractor for tech start- ups. We can provide practical suggestions from the perspective of a professional bike manufacturer,” He said.
“As new players join the game, [ the bikesharing companies] have higher requirements for traditional manufacturers. In the short term, it may create more jobs, but in the long run, it will force out some low- end production lines.” He Weiji, senior executive at Wolf Bike