When the wheels come off

The bike-sharing business took China by storm when it was introduced to this bicycle kingdom some two years ago.
The concept, where commuters can pick up a bike and park it anywhere after use, has done much to solve the “last kilometre” problem of having to get from train stations and bus stops to your final destinations.
At its height, there were some 80 companies offering over 23 million bikes in major cities throughout the country. However, that was way more than what the market needed.
The huge number of bicycles became a nuisance to other road users, causing havoc in already messy traffic. The two-wheelers also  obstructed carparks and pavements, and blocked entrances to buildings and tourist sites.
The plague of cycles forced local authorities to issue guidelines for bike-sharing businesses. But before more could be done, the industry began to collapse like a punctured tyre.
Operations went bust in their dozens in just one year. Riders were unable to get their deposits back. A bike-sharing giant based in southern Guangdong province became the first to be sued over its failure to pay back deposits.
Yueqi, which operates the Xiaoming Bike service, owed its customers, suppliers and employees 55.4 million yuan (Bt273 million).
Launched on July 29, 2016, Yueqi bought more than 430,000 bikes to be used in a dozen cities, including Shanghai and Guangzhou, and had collected some 800 million yuan in deposits from users.
Its financial problems began last December, when the Guangdong  Consumers’ Association lodged a  lawsuit against the company after receiving some 3,000 complaints about non-refunded deposits.
Consumers nationwide had paid 10 billion yuan in deposits to use shared bikes, according to official estimates last August.
Dozens of smaller companies were also found to be having problems refunding customers’ deposits.
High maintenance costs due to vandalism, theft and improper use were among the reasons for the rash of bike-sharing failures.
Now that the bubble has burst, China needs to deal with another problem – the disposal of damaged and unclaimed bicycles.
Bicycle cemeteries are rising as strange new landmarks on the outskirts of some cities.
Scrap metal operators and recycling companies are reluctant to touch the cemeteries due to low iron and aluminium prices.
The “dead” bicycles are mostly unrideable, vandalised and damaged faster than the workers could repair them.
In Beijing, shared bikes have been dumped in the river and in the lakes of the famous Shichahai area, Houhai and many parks. Meanwhile, selfish users commandeer the cycles by using their own locks to chain them up.
Bike-sharing giants Ofo and Mobike are still going strong with new investors pumping in funds.
Mobike recently announced a series of strategies to maintain its large market share. Among them is the launch of electric bicycles (e-bikes) with a top speed of 20km per hour and the zero-deposit plan for its over 200 million users. Existing customers can request a refund of the 299 yuan deposit.
The company has yet to announce what it will charge for its e-bikes, but their introduction may spark a new trend in Beijing now that Mobike has entered the market.
Meanwhile, the number of such bikes on the road is rather low, probably just a few hundred. I tried to get one, but the service is only available for registration with a Chinese identity number.
For foreigners in China, the registration process for shared-bike services is onerous. As well as having to provide a passport copy, foreigners are also required to snap a photo of themselves holding the document – a bit like taking a police mugshot.
The first bike-sharing business was started in 2014 by four friends at Peking University; the bicycles were meant to be used only within campus grounds. This was the birth of Ofo in China.
The service was expanded to several other universities the following year. The yellow bicycle hit the non-campus streets in 2016.
Now, the business has gone global, adopted in the capitals and big cities of Asia, Europe and America. Many are reporting the same problems that have afflicted the Chinese cradle of bike-sharing, with oversupply and vandalism topping the lists. Time will tell whether these are just teething problems for an business in its infancy, or if bike-sharing is an idea doomed to fail.