With significant venture capital injected, bike sharing has been booming rapidly in China since the second half of 2016, and already looks to be impacting the future development of the urban mobility ecosystem. Arthur D. Little considers the market dynamics and competition landscape, as well as some key takeaways for different stakeholders, including city authorities, the existing bicycle supply chain, and the new entrant bike-sharing companies themselves.
 

Since the second half of 2016, the bike-sharing business has been booming in China

China used to be the “Kingdom of bicycles, the biggest” market for bicycles in the world. Since the start of the 21st century, however, with the rapid increase of private cars and the convenience of public transportation such as metro rail, the use of private bikes has dropped.

However, thanks to the prevalence of smartphones, mobile payment via Alipay and WeChat, and the decreasing cost of GPS devices, a new business model of bike sharing has been enabled – and undergone explosive growth. The number of people riding bikes has dramatically increased since the second half of 2016, especially in Tier 1 cities, including Beijing, Shanghai, Guangzhou and Shenzhen. There are three key features of this new wave of bike sharing:

1. The ease of use based on digital technology. GPS and cloud are largely deployed in locating shared bikes. Users can easily use apps and QR codes via their smartphones to make locks open on bikes automatically.
2. Fashionable appearance and high technology in design. Bikes for sharing have highly standardized designs and colorful looks, with strong branding, and are built for convenience. In addition, the high technology applied appeals to a younger target market with novel features that include solid tyres (no need to inflate), carefully designed light frames, and solar panels in baskets to support the GPS function.
3. Pick up and drop anywhere. In contrast to other regions in the world, such as Europe, where shared bikes need to be parked in defined areas and locked up to posts, Chinese users can pick up and drop shared bikes anywhere, which is very convenient, compared to the option of a private bike. When the bike is locked up again, the user pays a fee calculated based on the length of time taken during the ride. Depending on brands, the payment for a 30-minute ride can be as little as 0.5 or up to 1 RMB. Due to its convenience and ability to address last-mile transportation, such business models have gained popularity rapidly.