If you walk anywhere in Beijing, you will soon notice bright yellow bikes everywhere. The strange decor isn’t an accident – The bikes are designed to be seen: they are part of a mad rush of start-up companies designed to make bike sharing popular. But will it succeed?
How does it work?
- Download the App.
- Register an account. You need to pay a deposit of about AUD$20. You also need a Chinese bank account and mobile number. Unfortunately, the app is only available in Chinese, but with a bit of patience, it’s easy enough to navigate for non-speakers.
- Each bike has an ID number. You type the number into the app and receive the 4 digit number to unlock the bike.
- Get biking.
- When you’re done, lock the bike and press a button on your phone to end the ride.
The user experience
These bikes are brilliant. You’ll see them all over Beijing and they make getting around quick and easy. In a city where car ownership rates are low, they are very popular. With no gears, they aren’t designed for speed, but you still get a bit of an adrenaline rush because there are always scooters, cars and bikes coming towards you from all directions.
The yellow bike company – Ofo – claims to have more than 85,000 bikes in Beijing, so it is usually easy to find one. The real convenience of these bikes is the ability to leave them anywhere – so you don’t need to worry about finding a docking area.
Best of all, at a cost of about 1RMB per hour (~AUD$0.20) it’s very affordable.
Will it make money?
I doubt it. The current business model is designed to capture market share, not to make money. Even ignoring theft, many of the bikes are already in poor condition (broken pedals, misaligned frames, flat tyres etc) and I suspect that the maintenance costs will absorb most of the income over time.
I also doubt you will see them in any developed country anytime soon – even in China where labour costs are low, I can’t see how the scheme could make any serious money. I doubt consumers will pay much more to use the bikes because buying a bike outright in China is relatively cheap.
Despite the realities, the fantasy has caught on. Ofo faces serious competition from other similar start-ups. Sadly, a similar electric scooter sharing scheme was shut down by authorities for breaching road licensing rules.
Who is burning their money?
Ofo is a start-up by two young tech-savvy Chinese men. In September 2016, it obtained about USD$100 million from private investors. Astonishingly, these investors have valued the company at USD$500 million. In the words of Darryl Kerrigan – Tell them their dreamin’.
For the moment at least, the public is enjoying the cheap ride.
For more information on the bike battle, check out Bloomberg Technology’s article.