China's Bike-Sharing Companies and Government Collide

Author Wang Fei / Edited by M.E. Strickland

The shared transportation economy, it seems, has evolved backwards, having gone from cars to bicycles. In 2016, bike-sharing companies like Mobike, Ofo, and Bluegogo erupted across China’s major cities, and almost overnight seemed to become a fixed part of the everyday commute for many urbanites. With their distinctive brand colors—orange and silver for Mobike, yellow for Ofo, and blue of course for Bluegogo—the bikes can now be seen dotting sidewalks and ranked up by the hundreds near subway station exits. With that success, however, has come an awkward period of adjustment, as the public and city governments try to negotiate a new set of common rules, etiquette, and laws around what is at once both an old and new mode of transportation.

Many in Western cities may be familiar with shared bikes that can be rented from small docking stations on streetsides. Similar operations have been used in Chinese cities, but the new bike-sharing companies are something quite different.

Each of the leading companies has a slightly different mode of operation, but the general concept is the same. Users install a given bike-sharing company’s app on their phones, pay a one-time deposit, find one of the company’s bikes anywhere on the streetside, and then simply unlock it, either by scanning a QR code on the frame of the bike or entering a number combination. Users are charged a small rate fee for distance travelled or time used, and can ride wherever they wish, leaving the bikes most anywhere when they are done with them.

It is that last feature, the ability to park the bikes anywhere and without having to return them to a docking station, that distinguishes the new bike-sharing companies from the old. If that seems like a small difference, then the explosive popularity of the bikes would seem to suggest otherwise. Already, hundreds of thousands of the shared bikes are deployed across each of China’s major cities, from Beijing to Shenzhen, and still more are being added. Ofo recently announced plans to up production to 10 million bikes per year. If it does reach that target, then it would be responsible for one in eight of all bikes produced in the world. Evidently, the flexibility to take and leave a bike anywhere has made all the difference, and many of the older docking stations now languish unused.

Yet it is also that difference which is the source of so much consternation. By fusing a few off-the-shelf technologies (QR codes, apps, GPS trackers) with humble bicycles, these startups have created exactly what tech companies so often preach for: disruption. The trouble is that cities and their residents have not yet worked out how to adapt.

Matters of bike etiquette have suddenly gained currency as a topic of conversation. Hordes of bikes have become a nuisance for some of the public as they clog sidewalks and already crowded parking lots, in a few well-publicized cases actually being thrown into piles like so much litter. Elsewhere, bikes are broken and cast aside, or left in inaccessible places, inconveniencing the next would-be rider. More seriously, some riders have been injured by what are assumed to be poorly made or maintained bikes. In all of these cases, fairly or not, the bike-sharing companies themselves have been called out to take responsibility. Local governments, however, are not waiting for the companies to step up and deal with matters on their own.

In March, for exmaple, Shanghai’s Bureau of Quality Supervision issued a series of proposals and regulations for the still nascent bike-sharing sector. The Shanghai bureau argues that shared bikes must be regulated “for quality and safety, not only meeting mandatory national standards, but also requirements specific to shared bikes for maintenance and loss … [and] including platforms, operational requirements, equipment maintenance, fare rates, deposits, systems for lodging complaints against users and compensation for harm caused.”

A raft of possible new regulations has been put forward: that the bikes can only carry the rider (no carrying someone else along on the back wheel, as is common in China); bikes must be scrapped every set number of years (three, provisionally); and they must be equipped with GPS. Mobike’s bikes already are, a feature that allows users to track down the nearest one available via their app. Ofo’s bikes, however, originally made do without GPS, a prime example of the kind of concrete, bottomline impact these new regulations could have: in order to comply, Ofo will need to pull its existing supply of bikes and install GPS trackers on all of them. Logistically and financially, that will be a significant burden.

The proposed regulations go on to specify that bikes should be built for people ranging from 145 to 195 cm in height, that they should be intended for users aged 12 to 70, that compensation for injury to users should be set at a baseline of 150,000 yuan, and that companies must have 50 maintenance staff for every 10,000 bikes.

Some amount of regulation for this nascent industry would surely be welcome. There is some degree of public interest in ensuring that bikes are not tossed all over sidewalks, after all, and if the bikes are poorly made and maintained, and a rider is injured as a result, then it is only natural that the bike-sharing company in question should hold some responsibility. But other proposed regulations seem likely to strain what is already a cutthroat market, and perhaps, as in the case of the GPS tracker requirement, pitch it in favor of one player over another.

But the challenges presented by bike-sharing are not likely to remain limited to China, because the industry, even as young as it is, already has global ambitions. Chinese bike-sharing companies have been making moves to expand into other countries, including Singapore and the US. Ofo recently debuted its bikes in Austin for a small test run, while Bluegogo tried to take its first steps in San Francisco, only to face immediate and intense opposition from local officials who say the company’s bikes will cause disorder on the city’s streets. In light of all this, the regulatory clampdowns in Chinese cities take on a larger significance. How the bike companies negotiate their relationship with the public and government in China might therefore presage if, and how, they will be able to succeed in cities elsewhere.

The bike-sharing industry broke out across China’s cities with dizzying suddenness. City governments have been unavoidably caught offguard, and the new spate of regulations is an understandable, if not necessarily ideal, attempt to cope with what is now a de facto part of urban transportation for milions of people. Riders, the wider public, governments, and companies all are attempting to adjust, and however the new regulations play out, this will no doubt serve as an interesting case study of what happens when technology startups’ success runs up against questions of public conventions.