When the wheels come off
Once a runaway success, the bike-sharing industry in China is now experiencing a bumpy ride due to oversupply and high costs.
THE bike-sharing business took China by storm when the service was introduced to this bicycle kingdom some two years ago.
This concept, where consumers can pick up a bike and park it anywhere after use, has very much solved the “last kilometre” problem of commuters having to get from train stations and bus stops to their final destinations.
At the height of this business, there were some 80 companies offering over 23 million bikes at major cities throughout the country. However, it was way more than what the market needed.
The huge number of bicycles became a nuisance to other road users, causing havoc in the already messy traffic. The two-wheelers also became obstructions at carparks and on pavements, and they blocked entrances to buildings and tourist sites.
“The first thing I do after reporting to work every day is move away the bicycles,” a local council worker in Nanjing city told reporters.
This problem forced the local government to issue guidelines for bike-sharing businesses. But before more could be done, the industry began to collapse faster than expected.
There was a series of casualties in just one year. Many riders were unable to get their deposits back.
A bike-sharing firm based in the southern Guangdong province became the first to end up in a bankruptcy lawsuit over its failure to pay back deposits.
At a July 11 briefing on the case, the Guangzhou Municipal Intermediate People’s Court revealed that Guangzhou Yueqi Information Technology Co (Yueqi), which operates the Xiaoming Bike service, owed its customers, suppliers and employees 55.4 million yuan (RM33.5mil).
As at June 27, a total of 118,738 users had yet to receive their deposits of 199 yuan (RM120) each, the local dailies reported.
Yueqi was set up on July 29, 2016. It bought more than 430,000 bikes to be used in a dozen cities, including Shanghai and Guangzhou, and had collected some 800 million yuan (RM484mil) in deposits.
Its financial problems began last December, when the Guangdong Provincial Consumers’ Association lodged a civil public welfare lawsuit against the company after receiving some 3,000 complaints about deposit refunds.
In August last year, the China Internet Network Information Center estimated that consumers nationwide had paid 10 billion yuan (RM6bil) in deposits to use shared bikes, according to Xinhua, China’s national news agency.
Dozens of smaller companies were also found to be having problems refunding their customers’ deposits.
High maintenance costs due to vandalism, theft and improper use were among the reasons for the failure of bike-sharing businesses.
Now that the bubble has burst, China needs to deal with another problem – the disposal of damaged and unclaimed bicycles.
Bicycle cemeteries – sites where bikes are dumped – are new sights at the outskirts of some cities.
Scrap metal operators and recycling companies are reluctant to take these bikes due to the low iron and aluminium prices.
The bicycles were vandalised and damaged faster than the workers could repair them.
In Beijing, I have seen shared bikes in the river near the office and in the lakes of the famous Shichahai area, Houhai and many parks.
Some selfish people use their own locks to chain up bikes.
Bike-sharing giants Ofo and Mobike are still going strong with new investors pumping in funds.
Mobike recently announced a series of strategies to maintain its large market share. Among them is the launch of electric bicycles (e-bikes) with a speed of 20km per hour and the zero-deposit plan for its over 200 million users. Existing customers can request a refund of the 299 yuan (RM180) deposit.
The company has yet to announce the charges for its e-bikes, but their introduction may spark a new trend in Beijing now that Mobike has entered the market.
Meanwhile, the number of such bikes on the road is rather low, probably just a few hundred. I tried to get one, but the service is only available for registration with a Chinese identity number.
For foreigners in China, the registration process for shared-bike services is pretty hilarious.
Apart from having to provide a copy of the passport, one is also required to snap a photo of himself holding the document, which is a bit like taking a police mugshot.
The first bike-sharing business was started in 2014 by four friends at Peking University; the bicycles were meant to be used only within campus grounds. This was the birth of Ofo in China.
The service was expanded to several other universities the following year. The yellow bicycle hit the non-campus streets in 2016.