Bicycles the new front line of Chinese internet giants’ fight for e-commerce dominance

In 2017, China saw millions of brightly coloured bicycles filling the streets of its major cities, the result of a surge in the number of bike-sharing businesses that had sprung up, seemingly overnight. By the spring of 2018, hundreds of thousands of those bikes had been abandoned in fields and car parks, making great fodder for photographers.

But while the initial craze has faded, the multibillion-dollar business fight is far from over, becoming instead another battleground in the intractable war between China’s competing mobile payment systems – Alipay and WeChat Pay, run respectively by China’s two internet giants, Alibaba and Tencent.

The money needed to keep this fight going, over bicycles and a lot more, will have to come from these companies, with the winner possibly winding up taking a cut from every consumer transaction in China.

But just how did bike-sharing become caught up in the battle for China’s mobile payments market?

It began in 2014 when a group of five young college students, led by Dai Wei, founded Ofo, so named because the letters resemble a bicycle. By 2015, main competitor Mobike was founded and by 2016, dozens of other competitors had joined the fray.

The idea was straightforward. Commuters need to traverse short distances between bus stops, subway stations, offices and homes, so readily available bicycles would make that “last mile” quick and easy. To fulfil that need, the bicycles had to be available in large quantities and riders needed to find them, unlock them and pay for the ride via an app without worrying about returning them to a specific location. Companies tracked their bicycles and gathered tremendous amounts of data in the process.