China market: Small bike-sharing firms struggling

China is likely to witness a wave of closure among its smaller bike-sharing firms, given the fact that three of such service firms have terminated their operations in less than two months, according to market sources.

On June 20, Wukong Bike, based in the southwestern city of Chongging, became the first bike-sharing firm to cease its services after 90% of its bicycles went missing – just five months after it started operation.

In early July, 3Vbike, also based in Chongqing, became the second one to announce a closure. The company kicked off its operation in February 2017, deploying 1,000 bikes in Baoding, Langfang, and Qinhuangdao of Hebei Province, and Putian, Fujian Province at a unit cost of CNY300 (US$45), with the number of registered users estimated at 11,000. But over 90% of the bikes were also stolen as of late June, forcing the company to shut down.

The third closure involved the Nanjing-based Ding Ding Bike, but it was an alleged scam, as the owner of the company allegedly absconded with sizeable down payments from registered users in early August, eight months after its official operation.

Industry insiders said though the second- and third-tier cities in China boast great potential for bike-sharing business, but small companies can hardly maintain viable operations there, because they cannot financially afford deploying too many bikes there, while serious theft problems and tough entry thresholds set by some local governments have worsened their operations.

Over 100 million users in China

Statistics compiled by the China Internet Network Information Center showed that as of June-end 2017, there were as many as 106 million users of bike-sharing services, dramatically up from zero just one year earlier.

According to iiMedia Research, four first-tier cities – Beijing, Shanghai, Guangzhou and Shenzhen – together command a 70% share of the bike-sharing market in China. Of them, Guangzhou and Beijing show the fiercest competition, with over 700,000 bikes deployed in each city, compared to over 530,000 units in Shenzhen, and 450,000 units in Shanghai.

In terms of market share, Mobike and ofo are the top two bike-sharing service providers in first-tier cities. The two are also actively making deployments in second- and third-tier cities. For instance, Mobike completed deployments in nine smaller cities in February 2017 alone, while ofo finished similar deployments at a rate of one city one week in the first quarter of the year and is expanding into fourth-tier cities.

Categories: IT + CE Software

Tags: China China market

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