Can popular Chinese bike-sharing startups Mobike & Ofo replicate their success overseas?

Li Wei, 34, from Beijing, has been spending his annual leave abroad with his wife since the two got married six years ago. During their adventures travelling to destinations popular among Chinese, the young couple has experienced an increase in special services geared specifically towards Chinese visitors, such as more shopping malls offering Chinese speaking guides, more local ATMs with cash withdrawable via Union Pay bank cards, more restaurants accept Chinese mobile payments, etc.

During the week-long Chinese national holiday this past October, the young couple went to Florence, Italy. To their surprise, they found Mobike, one of the most popular shared bikes from China, in the city’s downtown area. Using the very same application they use in Beijing, the couple easily unlocked two bikes and rode them around Florence for the rest of the day.

Li shared his experience on his WeChat Moments, exclaiming “Not just Chinese tourists but local residents also ride Mobike! The Chinese bikes are available in Florence. That’s amazing!”

Chinese bike-sharing startups, viewed as one of the “New Four Great Innovations from China”, have quickly expanded into international markets with the help of their deep-pocketed investors.

Go big, go global

By the end of November, Mobike is reported to have been operation in some 200 cities in 12 countries around the world, including recently-added markets such as the Netherlands, Germany, and the United States. Mobike riders take about 30 million rides per day and the company has 200 million total users. Ofo, MoBike’s direct rival, has put 10 million dockless bikes on China’s city streets, as well as 100,000 in 19 more countries around the world, including an aggressive push into the UK and US.

Despite the money pouring into the sector, a series of bike-sharing startups have collapsed in China over the last six months, leaving only few companies, particularly Mobike and Ofo, to dominate China’s domestic market. And now, it’s time for the two market leaders to flex their muscles in different business environments.

Mobike’s orange bikes in Sydney, Australia. Photo from Mobike

Pros and cons

There are opportunities and advantages for Chinese bike-sharing companies.

Firstly, there is an obvious market demand for shared bikes in countries besides China. According to a survey conducted by two German researchers, bicycles are a popular choice in local residents’ last mile travelling, even in New York City which is experiencing an increasing rate of taxi and car-hailing services and in large European cities with well-developed public transportation systems. Results from the German study suggest that even in developed Western cities,a strong market demand for shared bikes suggests real business potential for Chinese bike sharing platforms.

Secondly, dockless shared bikes are highly convenient in day-to-day urban commuting. Based on previous surveys and research carried out by Microsoft Research Asia, shared bikes in most European and American cities are those with docking stations, and their riding routes span primarily from specific public transport stations to surrounding areas. Yet, the dockless shared bikes of China have the advantage of being able to move more freely and a cover a wider geographical distribution.

Thirdly, leading Chinese bike-sharing startups have strong influence on the whole industry chain, from smartphone applications, smart lockers, to bike manufacturers. A multifaceted influence of this nature is difficult for Western competitors to imitate.

Meanwhile, Mobike and Ofo still face many challenges in international markets.

First, population density tends to be significantly lower in Western countries than it is China’s mega-cities. Due to the lower riding rates, operational and maintenance costs of bike-sharing in other countries are higher than in China.

Second, foreign governments often have more regulation surrounding public bike-sharing services. For instance, according to regulation of local municipal authorities, most shared bikes in Western countries are required to be docked ones. Some cities in the US with steep slopes and inclines require bikes to have front lights or gear shifts. And in some areas, local policies require bicycle riders to wear protective gear such as helmets, bracers, and kneecaps. All these requirements amount to extra costs and services for Chinese startups to engage and provide in foreign markets.

Ofo’s yellow bike in India. Photo from Ofo

The overseas operation of Mobike and Ofo also comes with other key differences. User-induced damage rates are lower overseas than in China, Ofo founder David Dai once told Chinese media. But the money-pouring strategy of the Chinese market does not work as well overseas due to much stricter regulation in Western countries. Mobike and Ofo pay more attention to their bikes’ precise market delivery and strategy in foreign markets, such as starting from serving in popular sightseeing areas (as opposed to along residential streets) in order to gain popularity.

With these pros and cons in mind, the two leading startups might prioritize efforts on cost control and strategic service locations, in order to gain a better market foothold in foreign countries.

Based on their strong influence on the industry chain, Mobike and Ofo might be able to further lower the manufacturing cost of bikes. But to break into exclusive Western cities and better follow local policies, Chinese firms need to build a closer relationship with local authorities and regulators in those countries.

Last but not the least, improved user experiences require localized services. From software like in-app maps and payment functionality, to hardware such as helmets and blink-riding jackets, services should cater to the habits, resources, and demands of local users.

(Top photo from Mobike and Ofo, edited by AllTechAsia)

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