Disposal: Next segment
150 bicycle-related factories, including assembly lines and accessory producers, and at least 40 of them are contractmanufacturing for bicyclesharing companies now.
She said there are more opportunities to tap. “Owing to high usage frequency of shared bikes, their disposal rate is high,” she said. “Such bikes can be used for only about half a year.”
Bike disposal firms may benefit next from the boom in sharing economy, she said.
Ofo, a major bike-sharing service provider, said it is trying out a disposal mechanism in some cities, but refused to disclose more details.
Wang said a long-term opportunity could be guidance services for users of bike-sharing services. Once they grow familiar with cycling around and develop an interest in riding high-end bicycles like sports bikes, there could be new opportuniries for manufacturers.
Typically, the shared bicycles tend to be low-end products. Profit margins for manufacturers may be low in spite of large volumes. So, factories are keen to find a sustainable development model.
Also, the euphoria over bike sharing may be related to service providers’ efforts to secure funding for their startups, hence may not last long, resulting in expanded production facilities turning idle in the long run, she said.
Bicycle-sharing service providers are yet to turn profitable, said Yang Zhiwei, an analyst at BOC International. He believes the business has the potential to ring in profits when it reaches a certain scale and its operations mature.
For example, in Yang’s conservative estimate, each ofo bicycle can generate about 3 yuan per day from rental and advertisement fee. Gross profit margin can be as high as 90 percent. Besides, the provider has expanded its service to overseas countries.
Fan Zhen, deputy secretarygeneral of the China Bicycle Association, said the primary challenge is to ensure shared bikes’ quality and safety. The CBA will draft a national standard in this regard, he said.
On Thursday, the bicycle associations of Shanghai and Tianjin issued a draft guidance on production, operational and maintenance standards, seeking feedback from all concerned. They urged service providers to ensure their bikes have a GPS function, are not parked in downtown areas and discarded after three consecutive years of use. The draft may take effect in May.