Over the past year, the shared-bike industry has refilled China's streets with tens of millions of colorful bicycles, leaving the world amazed by the return of the bicycle kingdom. But business insiders are quick to point out despite the phenomenon, with too many competitors trying to grab a market share for themselves, the current city plans may deter a further growth of the industry. For this, they call on the bike-sharing companies and the local governments to join hands in meeting transportation needs while striving to protect the environment and boost the industry in a more sustainable way.

Many Chinese citizens born in the 1980s share the common memory of their parents riding a bike to run all kinds of errands: picking up their children from kindergarten, going to work, going to supermarket. During this time, it was common place for a small child to sit on the back seat of a bike, struggling to hold up an umbrella over his mother's head to protect her from the heavy rain or the scorching sunlight.

In recent years, with China emerging as one of the biggest car markets on the planet, it seemed like the age of bicycle had become a distant memory. Surprisingly, the shared bike industry is breathing new life into this traditional means of transportation.

According to Chinese Cycling Association, in 2016, roughly 20 shared bike companies put 2 million shared bikes into the market, and it is estimated that over 20 million shared bikes will be released into the market in 2017.

The birth of the shared bike industry in 2016 has reignited China's passion for cycling. Cycling is a convenient means for Chinese commuters travelling from their homes to the subway station, offering them a pleasant alternative to illegal taxis. For other commuters, who travel relatively short distances to get to work, it has taken over as their sole method of transportation.

Chen Yue, Senior Research Director at Kantar TNS China Automotive Practice, an organization doing research about people's traveling habits, said that the development of mobile payment technology, China's large population, and the improvement of the awareness of environmental protection laid a solid foundation for the fast growing industry.

"Previously, people would like to call a didi taxi when the travel distance was within 1-5 kilometers. Actually, this is not an environmentally friendly method of transportation. The city also struggles to facilitate that many cars. The emergence of shared bikes solves this problem and enables a win-win situation for the users and the city."

Creative marketing strategies have also fueled the development. Sophia Huang, Account Director at Kantar Millward Brown, a company that focuses on advertising, and brand equity research, said the shared bike companies are big investors in advertisement, but at the same time they are good platforms for advertisement.

"For example, Mobike joined hands with Jingdong.com. This not only helped mobike to promote itself, but also helped Jingdong to promote their activities. Another example is the cooperation between ofo and the Minions. The shared bike companies have collected data from many young users. For example, users born in the 1990s and the 2000s, they are the most desired target audience for many advertisers.

Although shared-bikes offer convenience and a reduced carbon footprint, they also pose several challenges to the urban society. The docking stations for shared bikes have clogged the sidewalks, which have forced many pedestrians to walk on the bike-only lanes, rendering bikes to be ridden on the car lanes.

Also, the large quantity of bikes doesn't fit into the current landscape of many Chinese cities. Many modern Chinese cities were designed to facilitate cars, not bikes.

During the 1990s, China looked to turn itself from "a bicycle kingdom" into "a motor-vehicle kingdom." More and more cars were seen on the streets. Subways also became important transportation tools. The increasing number of cars and declining of bikes finally led to a change of street design. For example, the non-motor lanes in the municipality of Tianjin were shrunk from 8-9 meters wide to 5-6 meters wide.

This has also forced many bikes to be on the motor lanes. Chen Yue said, to maintain the traffic orders, Shanghai government has issued policies to block the entry of bicycles on certain lanes.

"The Shanghai government has increased the number of roads that prevent entry of non-motor vehicles. In the past, China had designed roads with cars only, in mind but as more and more cars hit the road today, there have been increasing environmental concerns. But unfortunately, these roads are already built. So there just isn't enough space to accommodate non-motor vehicles. That's why the government issued such a policy."

DANCHE

Shenzhen, a city that has very few bike-only lanes, has started fining riders who cause congestion by docking bikes on the sidewalks or motor lanes. This record would also be sent to the shared bike companies, who would increase the renting fees, or even ban users from using their bikes.

Even though the oversupply of shared bikes in first-tier cities like Beijing and Shanghai is becoming an elephant in the room, experts predict that more bikes are still set to be released in second and third-tier cities. Chen said,

"The development of the second and third-tier cities would follow the steps of the first-tier cities. They would have more shared bikes, and in the end would have to tackle the same problems by adjusting their development strategy as the first-tier cities are doing now."

According to official data, the discarded bikes can create more than 300 thousand tons of useless metal. Experts call for government regulation in the area because the industry itself still focuses more on enlarging their own market-share. Sophia Huang believed that government should shoulder the responsibility of regulating the industry." The idea of shared bike is to be environmentally friendly. If the flourishing of the industry is at the cost of the environment, we should rethink the way we run the industry. But currently, the companies still focus more on enlarging market share. I think the government should take the responsibility and supervise the industry.”

Chen Yue, however, suggests the shared bike companies should be more active in helping the government in terms of enacting policies to regulate the industry.

"For its own good, I think the shared bike companies should take the initiative in approaching the government for solutions, helping them to issue policies that would benefit all stakeholders. It's better to work together with the state authorities to tackle the problems, instead of passively following their orders."

 

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  • Chen Yue
  • Senior Automotive Research Director
  • Kantar TNS China

 

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  • Sophia Huang
  • Account Director
  • Kantar MillwardBrown China