China’s bike-sharing industry is ‘immature and unreasonable’, needs regulation, says state media commentary

China’s bike-sharing industry should be regulated to control the quality and quantity of shared bikes, according to an online commentary published Friday by People’s Daily, the mouthpiece of the ruling Communist Party.

“Three years ago, lots of people were happy about the convenience bike-sharing brought. Nowadays, abandoned bikes have become mountains of rubbish,” the commentary said.

Recently, thousands of abandoned bikes have been seen in rivers in Guangdong province, and hundreds of thousands of bikes are piled up in a “graveyard” in suburban Shanghai.

The Party mouthpiece said the primary cause of all the troubles is that the bike-sharing industry is “immature and unreasonable”.

Bike-sharing took off in China in late 2016 with dozens of start-ups deploying millions of the two-wheelers on city pavements, funded by billions of dollars in venture capital money. People’s Daily said around 20 million shared bikes have been put onto streets in China over the past three years.

Market leaders Mobike and Ofo have since expanded across Southeast Asia, Japan, the US and Europe, though both have pulled back from some cities in the US, UK, France and Australia.

In August last year Xinhua News Agency called dockless bikes one of China’s “four great new inventions” in modern times, making daily life of the public more convenient.

The newspaper quoted Zhu Dajian, professor of sustainable development at Tongji University, saying that the original intention of the sharing economy was to minimise material investment and ramp up service quickly. Therefore, after the initial investment in bikes the operators should have controlled the number and quality of shared bikes rather than compete on how fast they could put new bikes on streets.

“But the nature of capital to pursue profits made some companies divert from the original intention,” Zhu said in the commentary.

Local governments across China, including those in Beijing, Shanghai and Shenzhen, have banned companies from introducing more bikes to reduce the chaos caused by illegally parked bikes.

The once rapid growth in the industry has cooled down, with the number of bike-sharing users in the country forecast to grow 14.6 per cent in 2018, a steep drop from 600 per cent growth last year, according to a report by market research firm iiMedia.

Slower growth has further intensified competition, with dozens of players now whittled down to three main ones – Mobike and Ofo, both based in Beijing, and Shanghai-based HelloBike – but none have turned a profit yet.

Whether the remaining bike-sharing operators can stay independent is an open question because the industry continues to burn cash, which requires abundant capital. Mobike was acquired in April by Chinese on-demand services provider Meituan Dianping for US$2.7 billion, while ride-hailing giant Didi Chuxing is in talks to take over Ofo, people familiar with the situation told the South China Morning Post earlier.