Easy rider

The Shanghai app that people are calling the “Uber for bicycles”

Mobike w

For hire: unlocked using an app

Talk about China to an outsider in the 1970s or 1980s, and the typical image it conjured up was a billion people riding bicycles.

That image is fading as China takes on more of a car culture than before. But a local entrepreneur wants to turn back to the more environmentally friendly transport of the past, aiming to revolutionise it via the ‘sharing economy’ concept.

Mobike is a bike-sharing scheme that was rolled out in Shanghai in May. Its ‘hiring’ premise is similar to the city-bike schemes found in other cities around the world, but a primary difference is that Mobikes don’t have designated collection and deposit stations, instead using an Uber-esque smartphone app.

The user tracks down a nearby Mobike via their phone’s GPS and once located, the user unlocks it by scanning the QR code on the bike’s handlebars. The session ends when the rider locks the bike – yet again using the smartphone app.

Minus a network of bike stations, Mobike can keep rental fees low. The disadvantage of its approach is that some unruly customers have been able to take the firm’s shared bikes ‘private’. Mobike CEO Wang Xiaofeng told Liberation Daily that, after a month of operations, about a quarter of its customers had stored the bikes indoors (for their own sole use) rather than leaving them outside for others to find and share.

To combat this problem, Mobike introduced a fining system. Typically, the service charges users Rmb1 ($0.15) per half hour, but the fare can increase to as much as Rmb30 depending upon the user’s delinquency. Each customer receives 100 points when they register, and earns an additional point per bike rental. However, hogging a bike (if caught) will lose you 20 points, and when your point tally goes below 80 your rental rate will be increased to Rmb5 per half hour.

“Our objective isn’t to earn more money, but rather to fine those who are behaving in a way that is inconveniencing other users,” says Wang. “As for regular usage, we will maintain Rmb1 per half hour as standard.”

The highest rate of Rmb30 is incurred by users who deposit their bikes outside Shanghai’s outer ring road. According to Liberation Daily, Mobike discovered early on that some of its bikes were being transported to the outer limits of the city, and the QR codes were being scratched off in what looked like an attempt to steal them.

Why anyone would want to steal a Mobike is unclear as they aren’t high-specification. The company needs to keep maintenance costs down thus the bikes have been designed with durability in mind. They’re driven by a shaft rather than a chain, which is sturdier but more tiring to peddle, and the seat and handlebar heights aren’t adjustable.

Wang claims the bikes were designed to suit the standard measurements of “Asian people”, offering anyone with stature above (or below) the average a less comfy ride.

Preventing the bikes from being hogged or carried away is important not only in supporting Mobike’s brand philosophy, but also because the company has contractual obligations to upkeep.

Huxiu, a news portal, reports that Mobike signed an agreement in June with Shanghai’s Yangpu district government promising to maintain a certain number of bicycles within the area. In exchange the local government will help Mobike with regulatory issues. Yangpu also gets a service that the local government previously failed to implement successfully. Huxiu contends that none of the world’s bike-sharing schemes have been profitable without financial support from advertising or subsidies. The Hangzhou government operates China’s best scheme, but even its most successful year saw losses of Rmb5 million.

Wang’s smartphone-based app is an ingenious way of locating and hiring bikes. But it seems that Mobike will need some form of financial support to reach its goal of having 50,000 bikes available across one of China’s vastest cities. Then again, Wang is the former general manager of the Shanghai division of Uber China. That suggests he knows a thing or two about subsidising users to achieve scale…

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.