Does bike sharing have a rosy future in China?

China was once known as the kingdom of bicycles; however, with improvements in people’s livelihood, more and more people are replacing their bikes with cars. One major reason for this is that owning a car in China is a status symbol. Additionally, bicycles have fallen out of favor with many because of long daily commutes.

When news broke that Didi invested $100M in a small bike-sharing startup company called Ofo, people’s attention shifted back to bikes as a form of urban transportation. Worldwide, the sharing economy has become a way for cities to overcome the challenge of providing innovative urban solutions to many people, and two startups in China, Ofo and Mobike, are attracting lots of attention, and lots of funding.

In China, some cities have established their own bicycle-sharing system to provide individuals with an alternative form of public transportation. The scenic city of Hangzhou, for example, has 78,000 public bikes and more than 2,000 parking stations, and the city has plans to increase the number of bikes to 175,000 by 2020. This effort to expand the public bike rental service comes at a time of increasing competition from the sharing economy. Both Ofo and Mobike are expanding their well-funded business models from city to city.

Many young Chinese see the sharing economy as hip and cool, and some see sharing as an alternative to owning. What’s more, sharing-economy companies such as Ofo and Mobike are infused with green values. Users know that riding and sharing bicycles promotes a healthy lifestyle and helps the environment.

Advances in mobile technology accompanied by increased environmental awareness are helping to revitalize China’s bicycle culture. In bike-friendly Beijing, Ofo bikes are common on university campuses and Mobike is common on the streets of Beijing. Unlike Ofo, which started as a university service but is now expanding, Mobike allows people to locate and reserve bicycles in their area using GPS technology. Bikes are unlocked using a QR code, and the bikes can be returned to almost any location in the city service area.

New startups are changing the way we think about urban transportation, but the public rental model also has advantages. Bike stations are located at or near subway stations and bikes must be returned to a bike station. Bikes are also moved around if necessary, all of which makes public rental bikes a dependable form of transportation. Mr. Chen is the communication director at a large IT company headquartered in a hi-tech park located in Shangdi, northwest Beijing. Like many others in Beijing, he relies on public transportation. After exiting the subway station, he rents a public bike to get to his downtown office, which is located 1 mile away. Mr. Chen is able to get to work and can save time by avoiding the city’s traffic jams.

The bicycle-sharing system is gaining popularity in China, but like the rest of the sharing economy, there are challenges and consequences that must be overcome if Ofo and Mobike are to be successful business models. Trust and security are big issues for the sharing economy. The weather is another issue for bike users in Beijing, especially in winter when it is cold and the streets are icy. Bikes are sometimes lost or damaged, which is costly for a service such as Mobike. Many young Chinese still prefer the luxury of owning a car. And companies must ensure prices are low to attract a young demographic and to ensure repeat customers. The bike sharing economy certainly shows promise, but the future of the business model remains untested.