The well-documented Mobile Biking APP revolution in China is a wonderful example of Chinese ingenuity, innovation, and the growing start-up culture. Mobike and Ofo are the two largest players backed by Chinese heavyweights Tencent (the firm behind WeChat) and Didi (the largest taxi-hailing app that recently acquired Uber in China) respectively. Bikes are now everywhere in the large urban areas of Shanghai, Beijing, Guangzhou, Hangzhou, Suzhou, and Shenzhen. Users simply scan a QR code to access the bike and scan to end the journey, they can leave the bike wherever they finish the ride, and no stations are necessary. Payment is then made via the user’s account through the app.
Chinese Startup
The speed of growth was most striking, in China, everything moves fast, large scale investment to get projects off the ground is required in a competitive market, and speed is everything being first to market is key. Whilst this is a lucrative business model, mobile biking is, and will continue, to encounter certain issues. This is especially because of its speed of growth.
Here I’d like to explore some of the hurdles facing this new business model in China.
High initial expenditure
Mobike and Ofo are literally ‘burning money’.
Ten companies have now entered the market. Welcome to China, within a couple of months, you have ten competitors. Mobike and Ofo are the key players and are backed by large Chinese companies. The issue is that the value proposition is the same, it is difficult to develop brand loyalty when tapping into simple convenience. For most users, it does not come down to which brand of bike they use, but rather which is closer to their current location.
Seasonal usage
The winters in northern China are notoriously cold, dissuading users from biking. With half of the year less pleasant to ride, mobile biking will have to capitalize on the warmer spring and summer months. This more limited time frame could prove to be difficult. Pollution is also an issue with commuters prone to using the metro if air quality is bad.
The infrastructure in Chinese cities is already very good
With a strong existing infrastructure mobile biking has to slot in and carve its niche. Taking Shanghai as an example, the metro service is world-leading, taxis are relatively abundant and electric scooters often outnumber cars on the road. The bus service is pervasive when off the metro grid. In short Mobile biking will need to complement the existing infrastructural services, which in the larger 1st and 2nd tier cities are already fantastic. This could present issues.
Could it be a fad?
The Chinese are very receptive to new ideas and business ventures, especially those that make their daily lives easier. Having said this, biking is no new phenomenon… Katie Melua sang that there are ‘9 million bicycles in Beijing’, and this was way before the launch of Mobike and Ofo…
These companies run the risk of struggling to maintain growth in a marketplace full of alternative options. The other issue is biking can only be used for short journeys, in large Chinese cities this does restrict usage primarily to local journeys.
It’s fascinating to see the rise of new trends and business innovations from Chinese start-ups. Ofo particularly was started by a Beijing IT student in a garage. These humble beginnings are inspiring many other Chinese tech firms to innovate and bring ideas to market, it is however important to realize certain limitations for mobile biking to succeed it is important to jump these hurdles.
we are a Chinese digital Agency based in Shanghai