Scrap metal ... abandoned rental bicycles in Fuzhou city end their days in a graveyard to China's sharing economy. Photo: AFP

It should have been the anthem for a doomed craze in China. As cities across the country became gripped by bike-sharing mania in 2017, “Bicycle Race” by the iconic rock band Queen would have perfectly complimented the sound of clunky chains.

By the end of that year, there were nearly 2.5 million cycles for hire in Beijing alone as the trend turned into an obsession after going viral across 10 major cities, including Shanghai, Shenzhen and Tianjin.

The resplendent rainbow fleet had arrived with Mobike, Ofo and Bluegogo extending the boundaries of pedal-power in the race for “market share.”

“Because of the urge to seize market share, many companies invested huge amounts of capital in the sector regardless of the actual demand, which led to excessive overcapacity and damaged bikes, forcing many of the companies to [later] declare bankruptcy,” Zhu Dajian, a professor at the College of Environmental Science and Engineering at Tongji University in Shanghai, recalled last year.

Fast forward another 12 months, and rusting relics in “bike graveyards” can be found on the outskirts of cities, a boom to bust business and a decaying monument to a two-year phenomenon.

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Read: China’s ‘bike graveyards’ a testament to bubble trouble

“It now appears bike sharing [was] the stupidest business, but the smartest brains of China all tried to get in,” Wu Shenghua, the founder of now-defunct 3Vbike, told the Reuters news agency. “It now seems ridiculous.”

But before the wheels fell off, the road ahead was paved with eco-friendly green intentions, which would lead to a pot of gold just over the horizon.

Technology ended up playing a key role in what was a simple idea. Customers scanned QR codes on their smartphones to register “deposits” before unlocking bicycles and paying for short trips.

In the autumn of 2017, there were up to 70 bike-sharing brands with 16 million cycles on the streets for a customer base of about 130 million, according to China’s Ministry of Transport.

Thousands of abandoned bicycles are piled up at a park in Shenyang city in Northeast China. Photo: AFP

At the cutting-edge of the industry was Mobike. Its tread marks could be found in 170 cities worldwide, with the company owning seven million bikes, as well as having more than 100 million customers.

“When you combine environmental protection, technology and business, it’s going to be very cool,” Hu Weiwei, the co-founder of the group, said at a United Nations event at the time.

“We can make environmental protection a lifestyle and a sustainable business model,” she added just before the crash.

Fueled by venture capital money, Bluegogo was the first victim as the brakes were applied.

“Its failure represented the funding bubble collapsing [for shared bikes],” Xue Yu, an analyst at market research firm IDC, said.

Even Ofo started to struggle to get out of first gear despite being valued at more than US$2 billion with 10 million bikes in 13 countries in 2017. High profile investors included e-commerce giant Alibaba and riding-hailing firm Didi Chuxing.

Two years later, the group is still in bubble trouble and grappling to refund cash deposits to millions of customers.

In September, China’s state media reported that Ofo had moved out of its offices in Zhongguancun, the bustling hub for startups and tech companies in Beijing. The payroll was also cut from 6,000 to just a few hundred employees as rumors of a pending bankruptcy continued.

Dai Wei, the founder and CEO, has refused to contemplate such a scenario. “[We will] survive even on bended knee,” he said in an internal memo last year.

Still, the changing business climate in China has had a profound effect on the “sharing economy” sector with Mobike struggling to operate on well-worn tires.

After being bought by Chinese delivery giant Meituan for $2.7 billion 11 months ago, the company streamlined its international operation and retreated to its home market. It also increased rental rates in November to boost the bottom line.

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“Mobike will continue to be loss-making through to 2021 and be a drag on overall company [Meituan] profitability,” a report released earlier this year from equity firm China Tonghai Securities stated.

Overall, this has been a depressing year for China’s economy as the trade war with the United States drags on. So far, signs of stress have appeared in consumer spending, factory production, investment and tumbling exports.

To complete a depressing picture, GDP growth in the third quarter dipped to 6%, the slowest rate in nearly three decades.

“The current external environment [has become] more complex and severe, with increasing downward pressure on the domestic economy and increasing difficulties in the business operations of companies,” Premier Li Keqiang warned last month.

Those “difficulties” are there for all see in the rusting relics of “bike graveyards” scattered across major cities in the world’s second-largest economy.

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