New business cycle for China's bike-sharing start-ups

Mobike, ofo and Bluegogo intend to expand into overseas markets

Bike-sharing start-ups in China are gearing up for overseas expansion after enjoying early successes in major cities in their home country.

Orange-coloured Mobike and ofo, with its bright yellow bicycles, have picked Singapore as their first stop while Bluegogo has chosen San Francisco.

Mobike's head of international operations, Mr Florian Bohnert, told The Sunday Times that the Shanghai-based company's overseas expansion is "one year in the making".

"It is not like starting in the next city in China so we need a thoroughly thought-out plan," he added, referring to the company's rapid expansion in China where it grew from one city to 23 in 10 months.

More than 10 million users have taken more than 200 million rides using the app.

 

Bike-sharing services have emerged in big Chinese cities like Shanghai and Beijing in the past year. Unlike rental schemes such as those in London and Paris, riders use their mobile phones to locate and pay for these Chinese bikes, which can be left anywhere after use.

Bike-sharing services have emerged in big Chinese cities like Shanghai and Beijing in the past year. Unlike rental schemes such as those in London and Paris, riders use their mobile phones to locate and pay for these Chinese bikes, which can be left anywhere after use.

The popularity of these services has brought about a host of problems such as theft, vandalism and complaints of haphazardly parked bikes obstructing traffic. Despite these problems, the companies have ventured overseas.

Mobike has raised more than US$300 million (S$423 million) since the beginning of this year, backed by Chinese tech giant Tencent and American private equity firm Warburg Pincus.

Mobike plans to start in Singapore by the end of this month.

Mr Bohnert hopes to work with the Singapore authorities on its regulations on bike-sharing, just like Jinan did with Mobike. "They understood the value of having smart bikes in the city. So far, they only allow Mobike (to operate) in the city," he said of the capital city of eastern Shandong province.

According to Chinese media reports, Jinan had insisted that bike-sharing companies that want to operate in the city must be able to accurately locate the whereabouts of every bike that is locked and stationary. So far, only Mobike has the technology to do so.

Mr Bohnert said the company wants its foray into Singapore to "work perfectly" so that it could become another case study in which the company was involved in the development of a city's regulatory framework for smart bikes.

"We can then learn from this and apply to other cities," he added.

Another bike-sharing start-up, ofo, started a trial in Singapore with around 1,000 bikes three weeks ago.

Some of the bikes were spotted in Pasir Ris. It has also started operations in the University of California, San Diego, in the west coast of the United States and will make its bikes available in London soon.

Co-founder Yu Xin told The Sunday Times that preparation work for venturing overseas started last November. The company is looking to use these three locations to expand into other cities in South-east Asia, the US and Europe.

"Our biggest advantage is that we have a lot of experience in the Chinese market, and most of the operational experience can be applied to our overseas market," said Mr Yu, who co-founded the company with four other Peking University (PKU) schoolmates in 2014.

Since its roll-out on the PKU campus in 2015, it has garnered more than 20 million users who have used its yellow bikes some 300 million times. It has since expanded to nearly 40 Chinese cities and raised US$450 million in its latest round of funding from investors such as investment group DST Global and Chinese ride-hailing app Didi Chuxing.

But Mr Yu is aware that the company has to adapt its offerings to the circumstances of the new markets. He noticed that in Singapore, cycling is popular as a form of sport.

"We are in the business of connecting (users) with bicycles, any kind of bicycles, not just those for commuting. So there's a possibility that we can provide sports bicycles in the parks so that people can just pop by to exercise any time at their convenience," said Mr Yu, who is in charge of ofo's overseas operations.

Both Mobike and ofo cite Singapore's conducive business environment, strategic location in South-east Asia and supportive government initiatives as reasons for their choice in making the Republic their first stop overseas.

But the presence of ofo's commuter bikes in some parks has already provoked the ire of rental bike operators in Singapore, who complained of unfair competition.

For now, the Singapore authorities are adopting a wait-and-see approach before they take any further measures.

A version of this article appeared in the print edition of The Sunday Times on March 05, 2017, with the headline 'New business cycle for China's bike-sharing start-ups'. Print Edition | Subscribe