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Chinese bike sharing giants heading stateside

While most of us are used to seeing American companies expand around the world, it is still rare to see Chinese companies coming to the US. That appears to be changing as venture backed companies are raising huge amounts of money to expand globally. Alibaba just held a huge conference in Detroit and now one of their investments is coming to the US -- bike sharing. Chinese bike sharing is a massive on demand service - think of it as the Uber of bikes but much bigger with faster growth. Now the two Chinese giants in the space, Mobike and OfoInc, are eyeing the potential of international expansion and they are running trials in the US. While it is still in the early going, Chinese bike sharing is booming and these two companies have the benefits of experience of millions of daily riders. Both companies have raised huge amounts of money this year at over $1 billion valuations.

Ofo operates 6.5 million bikes in more than 150 cities in 5 countries. Its investors include Alibaba Group and it wants to bring its yellow bikes to 20 million in 200 cities globally by the end of this year. That's fast growth! They have been running a trial project in California since March and their co-founder Yu Xin said that their expansion "will grow fast in future." A recent expansion into Singapore signed up over 100,000 users in just 100 days gives them confidence in overseas growth.

Mobike, which is backed by Tencent and Foxconn, has raised $600 million recently to expand internationally and they are eyeing the Washington, DC market for a trial. They are the leader in bike sharing with more than 70% market share in China where month over month growth is over 100%! Mobike has 5 million bikes in China with as many as 25 million riders on peak days and more than 100 million registered users.  It operates in 130 cities across China, Japan, Singapore and the UK. They are aiming to increase to 200 cities by the end of the year, mainly by expanding into more foreign locations.

Both Mobike and Ofo offer "dockless" bike-sharing, allowing urban residents to lock and unlock bikes anywhere via a smartphone app, picking them up or return them by the roadside and bike racks rather than designated docking stations. The bikes have embedded GPS chips and are simply unlocked by scanning a QR code. It is unclear if the dockless system will work the same in the US (especially with current regulations) as it does in other cities. But if it can, riders will not have to return bikes to designated stations after use, which could be a huge advantage over the US competitors.

According to a report from research firm Roland Berger last year, bike sharing has become a global business, with about 1,000 operations around the world. The industry is expected to be worth as much as $5.9 billion by 2020, according to the report.

With innovation in China thriving, expect more Chinese firms to come stateside in the near future...

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About the Author: Chris Wang

Chris Wang

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