China's Dockless Bike Share Coming To America

April 3, 2017 - I just returned to the USA from a trip to China and Taiwan and normally when I get back from a trip like this I post a quick recap about things seen during our travels. This blog post however will be a little bit different and for those in a hurry, unfortunately a bit more wordy as I've had an eye opening view into a trend that I feel is about to transform the bike industry here in the USA. Dockless bike share systems are coming to a city near you.

Ofo Bike Being Ridden In Tianjin, China

When I was in China awake in the middle of the night due to some serious jet lag, I hopped online to see what I could find out about all these bike share bikes I was seeing on my trip. There were a few articles online and even while I was over there the Wall Street Journal wrote a brief article covering this trend.

I still decided to write this blog post however, because rather than just using third party interviews and photos purchased from Getty Images, I was there with my camera and an industry insider's point of view. I was able to see dockless bikes share on the streets and in the factories actually getting built. Then we went to the Taipei bike show and saw countless booths promoting bike share bikes and suppliers were very eager to discuss its impact on the local industry.

Mobike Outside A Chinese Office Building

About Dockless Bike Share

Dockless bike share takes the popular concept of US and European bike share systems and un-tethers them from their docking stations. This means you can simply grab one of these bikes and go and when you're done with your ride you can leave the bike anywhere you want and be on your way. This solves the so called "last mile" issue with most forms of public transit and bike share. This means you take the ride straight to your destination like you would a taxi or Uber. You are only charged per ride and each bike has a unique system that combines a fancy app, GPS and smartlocks that makes the whole system work seamlessly.

Scan QR Code To Get Code To Unlock Your Bike

The traditional bike share system lets you rent a bike for an individual ride or on a subscription basis but you have to pick up the bike and return them to a docking station. These bikes and stations are expensive to install, manage and maintain and only work in cities where the stations are everywhere making it easy to drop off a bike after a ride. Here in Milwaukee we have a great bike share system called Bubblr Bikes and every year their ridership and number of available bikes/kiosks continues to grow. The problem however is that their kiosks are only located in a handful of locations across the city, meaning that unless your journey starts or ends at one of these locations, you're going to have a bit of walking to do. Add in the fact that sometimes the docking stations are empty when you need a ride and it's pretty obvious there are some drawbacks to traditional bike share.

What's Happening In China

China is a very polluted place. A lot of that pollution comes from their growing middle and upper class moving to cities, buying cars and sitting in horrible traffic, tolls and the occasional police checkpoint (seriously I was just was in one). In order to combat this pollution, China is doing a number of things, one of which is encouraging cycling as a form of transportation. With the help of the government and newly minted Chinese billionaires and venture capital, dockless bike share got it's start. Bikes are being produced by the hundreds of thousands and being dropped off in major cities all over China. We were in a smaller city (only a few million people) and these bikes were everywhere. Like most startups, profitability isn't a concern and even though there will be theft, loss and damage, factories keep cranking out these bikes using Chinese made steel and parts including solid rubber tires that don't go flat.

Solid Rubber Tires With Holes Drilled To Reduce Weight

The Players

Mobike, Ofo and BlueGoGo are just a few of the bike share players currently changing the landscape in China. This article that was recently published by The Guardian in the UK is one of the best I've seen that covers this trend, the players, the numbers and the scale of Chinese bike share.

The Impact Of Dockless Bike Share

Right now the impact of dockless bike share is mostly being felt in China and Taiwan but a few markets in Europe and most recently, Austin and San Francisco here in the US are getting a crash course in dockless bike share. In Asia the impact is pretty big. These bikes are everywhere in Chinese streets (and even some underpasses on the highway) and they are already starting to affect the local bike industry. It's much cheaper to rent a bike per ride than it is to buy one so Chinese domestic bike sales are already starting to get affected. The spin is that more people riding bikes is a good thing for the industry but remains to be seen if these riders will actually go into a shop and then purchase a bike.

Unlocking Bike After Receiving Text With Combination

These bikes have to be cheap to make so they are made in China with affordable Chinese made parts. Because of this right now frame builders, parts suppliers and assembly factories are struggling to keep up. This is actually starting to delay production orders for companies because their supply chain is maxed out.

We were at a factory over there and they were working full staff on a Sunday trying to build and assemble 10,000 of these bikes.They had already had orders for 100,000 and they were cranking out bikes as fast as they could. Please note that this one was assembly factory among many in China that are building these bikes around the clock.

Bluegogo Bikes Being Assembled In China

Across the strait in Taiwan, the bike industry there isn't benefiting from this surge in production. The bill of materials for these bikes needs to be as inexpensive as possible because in addition to the frame and parts, these bikes include the app, smart lock and in some cases a solar panel. Because of this, the companies are sourcing local Chinese made parts that tend to be much more affordable.  Every supplier we met with in Taipei talked about it and it was one of the focal points of the Taipei Bike Show.

Traditional Bike Share Bikes In Taipei, Taiwan

If you've made it this far congratulations! I'll wrap up the article with a few quick pros and cons as far as I see it. This is just my opinion and it will be interesting to see how this all plays out but I guarantee that every bike share provider in the US is watching this trend. Bike shops that are already under attack from the Internet, big box stores, mobile bike repair, bike rental apps and countless other sources are about to get hit by this one too. People will now have the option to pay per ride rather than owning a bike that unfortunately sits in your garage or apartment most of the time. Dockless bike share is coming to America and most likely to a city near you. Stay tuned.

Saddle Turned to Indicate Damaged Bike - Do Not Ride!

Pros

The advantage of these systems are obvious. With the use of the app you can quickly locate a bike, scan the QR code to unlock the bike and be on your way. Rides are cheap and it makes it easy to quickly get between two points in a city without having to a take an Uber, cab, bus or train. Less cars on the road means less pollution and riding bikes is a form of exercise and exercise is good. Getting more people on bikes is always a good thing and as more people ride bikes hopefully cities will take note and design infrastructure that is more bike friendly. Being able to take a bike directly to your destination solves the last mile issue of public transportation and bike share will most likely be embraced by people in cities all over the US.

Cons

There are a lot of potential negatives of this system as well and reasons why implementing them outside of China won't be as easy it sounds. These systems got their start in China with the help of some serious venture capital money and the support of the Chinese government. When we were there visibility was only a few hundred feet due to the pollution and bike share is seen as a way to get more polluting cars off the road. Because of this the government is behind it 100% and they are taking some unique measures to ensure that the problems listed below don't happen.

Theft

Theft is obviously an issue with these bikes. Here in the US bikes are stolen every minute and even with the best lock, thieves can find a way to get at your bike. These bike share bikes are left anywhere in open public and have a simple lock that locks up the back wheel. Thieves in the US will have a field day will this. While the systems have a GPS unit to track them, thieves will find a way to disable it and these bikes will get stolen. 

While we were in China there was an article how two nurses had taken bike share bikes and parked them at their homes and were using them as their personal bikes. They were arrested, spent 5 days each in jail and the news was all over the place. My guess is this was a message to other people to not do the same thing. Can't see the same thing happening in Austin, TX.

Bike Share Bikes Near The Taipei 101

Vandalism

These bikes can be parked anywhere and they don't belong to anyone. They are designed to be left on the street all the time and unfortunately it's too easy for people to trash them. It will happen.

When I was in college in 1996, local Madison, WI bike shop Budget Bikes introduced the Red Bike Project. They painted a bunch of old bikes red and left them around the city for anyone to ride. The idea was awesome but unfortunately over time you'd see Red Bikes hanging in trees, submerged in local lake Mendota or locked up outside of classes for people that had commandeered the red bikes as their own. Over time the Red Bike Project has changed and now you put a $100 deposit down and you get a bike for the season. You get your money back when you return the bike at the end of the year. If you don't, they keep the deposit. My guess is that the system didn't work as planned and while it's different than dockless bike share, even in the friendly Midwest bikes left out in the open were trashed. Now imagine this in a big city. Oh boy.

Scanning An Ofo Bike In China

Storing 

Cities like San Francisco are freaking out because they're worried that these bikes will end up all over the place and become an eye sore and are worried about bikes ending up piled up on city streets, parked in the middle of sidewalks or on private property. This one is actually valid. When we were in China we saw bikes all over the place including knocked over in the road, piled up in some spots and even left under overpasses in the middle of a highway. These bikes will end up all over the place and cities don't want to be the ones responsible for cleaning them up. Dockless bike share companies will have to come up with a good plan for this and if not these systems most likely won't get approval in a lot of cities.

Traditional Bike Share Gearing Up For A Fight

Replacing Existing Bike Share

The cities that already have bike share systems in place have invested a lot of time, resources and money in these systems. Do you think that they will simply allow these companies to come in totally disrupt what they have worked so hard for? Also, the bike share companies themselves have some pretty high level contacts with local government and they will most likely try to block these companies from coming in and disrupting their business. Similar in a way that taxi companies and cab drivers are reacting to Uber or the way that car dealerships are trying to block Tesla's direct model; they won't go down without a fight.