Saturday, May 30, 2020

Spinning the Wheel on China’s Tumultuous Bike-Sharing Industry

bike-sharing

Prospects are picking up for China’s once-dying bike-sharing industry

 

By Sharon Lewis

 

The bike-sharing market is part of the burgeoning global sharing economy. In China especially, this phenomenon picked up with furious intensity in 2017, only to become a bubble that burst the next year, resulting in China’s famous bicycle graveyards.

 

With the situation devolving into total chaos – bike-sharing businesses going bankrupt, barely used bicycles left abandoned on the streets, and bicycles piling up at impounding lots and scrapyards – the Chinese government was eventually forced to make regulatory interventions.

 

It looks like the bike-sharing industry in China, however, has withstood the onslaught. This is mainly because Chinese business behemoths Meituan-Dianping, DiDi Chuxing, and Alibaba stepped in to breathe life into the industry. They did this by either absorbing smaller bike-sharing startups such as Mobike, pumping investment into them such as with Hellobike, or starting their own venture in their space, which is what led to the inception of DiDi Bike.

 

The bike-sharing service by Chinese app-based ride sharing platform DiDi Chuxing announced on May 20 that it has entered into a ‘strategic partnership’ with new energy service platform State Grid Shenma (Beijing) Electric Technology.

 

State Grid Shenma is a joint venture between Chinese government-owned State Grid EV Service, and electric car trading platform Shenma Chuxing.

 

According to the statement, the partnership brings together the collective expertise of DiDi and State Grid Shenma to create a new shared e-bike fleet model, combining DiDi Bike’s fleet network and State Grid Shenma’s industrial capabilities.

 

It added that this partnership will look closely at green mobility supply chain solutions. Additionally, the partnership also aims to improve battery exchange and charging infrastructure solutions, undertake a universal safety standard for e-bike batteries, and facilitate better financing and leasing options in the supply chain.

 

The statement also said that the partnership will explore the applications of big data, artificial intelligence, and the Internet-of-Things in the green mobility industry. The service will be expanded to cities in China, starting with Suqian in Jiangsu.

 

DiDi has previously partnered with State Grid EV Service (which owns State Grid Shenma) in 2019 to provide charging stations for Didi’s open auto-solutions platform, Xiaoju Automobile Solutions. The partnership made State Grid’s nationwide network of charging points available for DiDi’s electric vehicle fleet.

 

Earlier this year, DiDi also announced a car-leasing partnership with an automotive consortium that included the State Grid Corporation of China, the parent company of State Grid EV Service.

 

The collaboration, led by DiDi and Chinese state-owned automotive manufacturer BAIC, aims to have a fleet of 100,000 cars for lease within the next three years.

 

Head of DiDi’s two-wheeler business Zhang Zhidong said in the statement, “As one of the most commonly used transportation options that is also highly dependent on users’ unique needs, a robust shared smart mobility network requires a high degree of collaboration and integration across data, software and hardware, and thus is an area worthy of deep exploration.”

 

The announcement from DiDi about the bike-sharing partnership comes at an opportune time – lockdown measures due to COVID-19 have been eased in China, and people are stepping outdoors once again.

 

Things are looking particularly positive for the e-bike sharing sector, with reports that the number of citizens choosing bike sharing is rising, and the number of ride orders beyond three kilometers is increasing as compared to the previous year.

 

While increasing urbanization and a post-pandemic surge may explain this upswing, it is still too early to say exactly how the demand in the market will play out. As with most sectors in current times, players in China’s e-bike-sharing market will also need to celebrate cautiously, or risk running their business into an early grave.

 

Header image courtesy of DiDi Chuxing

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