Road is turning bumpy

[email protected] China Post

The battle of colorful bicycles in China’s bike-sharing market has turned fiercer.

The top two players, Mobike, which provides orange bikes, and its rival ofo (yellow bikes), are set for rapid growth.

Research firm QuestMobile’s data shows Mobike had 978,600 daily active users in January, up 20.4 percent month-on-month, while ofo had 486,600, up 59 percent.

Penguin Intelligence, an internet-focused think tank affiliated to Tencent, said with the two startups’ rapid growth, there is an increasingly high overlap between Mobike and Ofo users.

For instance, Mobike had 6.92 million registered users overall by January, of whom 1.22 million also used ofo bikes, up from 728,200 in December 2016.

Feng Chen, Penguin analyst, said in a report bike sharing has gained strong word of mouth and cultivated a high degree of user loyalty.

Bike sharing provides an additional choice for users’ short trips, Feng said. “Catering to users’ specific demands, it really offers better user experiences.”

A Penguin survey of more than 6,000 smartphone users found 61.3 percent of the bike-on-demand service app users will travel less than 3,000 meters or 3 kilometers per ride, and 62.9 percent of the users will mainly commute from bus stations or subway stations to their destinations.

Of those surveyed, 48.7 percent said they would like to have more short trips using shared bicycles, and almost 60 percent accepted shared bikes as a better choice for travelling.

As more people choose to share bikes, they are encountering problems. Sometimes, there aren’t adequate number of bikes available to rent. But in the long run, shared bikes will prove environmentally friendly, according to the survey report of Penguin.

Known as the “Kingdom of Bicycles” in the 1980s, China has grown to be the world’s largest auto market. Now, bike sharing is expected to make bicycle-riding fashionable again. What’s more, venture capital firms have funded startups providing bike-sharing services.

Since 2016, the Beijing-based Mobike, which is known for its distinctive GPS-equipped bikes, has landed several rounds of financing, totaling hundreds of millions of dollars. And it has partnered with Foxconn Technology Group to double its annual bicycle production capacity to more than 10 million units.

Its record is not unique, as its rival ofo raised 3.1 million yuan ($450 million) in its latest round of funding in early March, which gave it a valuation of more than $1 billion.

Zhang Xu, analyst at Beijing-based internet consultancy Analysys, predicted that the bike-sharing sector would see a shakeout by the end of this year and mergers, or some sort of consolidation or rationalization of existing players, may ensue in early 2018.