On 20 July 2016, the China Ministry of Transport published their 13th Five-Year Plan on developing urban mobility across Chinese cities. By 2020, China envisions to have developed a smart urban mobility infrastructure, which is efficient, fast, safe, comfortable, affordable, reliable, low-carbon, and public-transport-centric, with a projected annual ridership of 120 billion. A range of business opportunities may arise to fulfill the growing market for last-mile transport services (e.g. community shuttle, bicycle-sharing), BRT systems, new energy vehicles, smart parking and congestion pricing solutions. Management expertise may also be in demand from reforming the public transport industry.


Bike Share

The bicycle sharing space is of particular interest given the focus on public transport and the perpetual challenge of finding sustainable and convenient last mile solutions. Smart bicycle sharing has been a trending topic in China’s tech entrepreneurship space in recent months, with half a dozen notable companies announcing sizeable new funding for their bicycle sharing apps. Among them, Ofo Bike and MoBike have each raised more than US$100 million from venture capital. Similar to the car-sharing space, some bicycle sharing apps are new to the game with backing from bicycle manufacturers, such as Xiaoming Bike (app) backed by Cronus Bike (manufacturer), and UBike (app) backed by Shanghai Forever Bike (manufacturer). With Singapore planning for a pilot bicycle sharing program in Jurong Lake District in the coming year, it will be interesting to observe the dynamics in China’s smart bicycle sharing development and think through the best model to deploy bicycle sharing in land-scarce Singapore.

Instead of the docking stations in traditional public bicycle sharing programs (e.g., Hangzhou Public Bike), these smart bicycle sharing programs allow users to park anywhere. This new “dockless” mode of operation has, as its popularity suggests, improved both the convenience and geographic coverage of using shared bicycles. In addition, the dockless mode enables a different urban planning approach: avoid the challenging task of planning the location and capacity of each docking station upfront, and leave it to be answered by future optimization with actual usage data.

How does it work? Ofo Bike utilizes a mechanical combination lock, whose code can be requested via its mobile app after inputting the bicycle’s plate number (e.g. 153299 as in the photo). MoBike has equipped its bicycle with a smart lock, which can be opened by its mobile app in one step via scanning a QR code. After completing the trip, users manually close the lock in both cases.

MoBike’s smart lock is equipped with GPS devices, making the MoBike app smarter than others. The GPS location of MoBike bicycles can be accurately detected and sent to the cloud service, so that users can view and reserve available bicycles via the MoBike app. GPS data is also a key ingredient for the operator to track and optimize its fleet operations; on the other hand, without GPS data (as in the Ofo Bike case) the operator may be even blind about where its bicycles are located. As shown in the table, MoBike’s smarter bicycles, with a higher bicycle cost, are also equipped with maintenance-free tires compared with traditional air-inflated tires, minimizing maintenance cost and downtime.


Regarding the business model, smart bicycle sharing operators derive their cash inflow from two main sources: a user deposit collected when a user first signs up for an account via the mobile app, and a usage fee charged based on the duration of each trip. A high ratio of users per bicycle would help finance most of the capital cost of bicycles with the user deposit. Revenue from the usage fee, after deducting maintenance costs, would hopefully yield a net operating profit.

If most of these shared bicycles are used for twice a day and for a short duration each. MoBike, with a significantly higher bicycle cost, would require about 50 months to pay back the capital cost. Ofo Bike, with larger uncertainty in maintenance cost, would yield a payback period of only 5 months at its best. Hangzhou public bikes would most likely yield an operating loss from the cost of bike maintenance and fleet management.

China has seen the mode share of bicycling in urban transport declining in the past decades due to three main factors. First, car ownership has become more affordable to the average Chinese household. Second, longer commuting distances between home and work have become more common, as China’s rapid urbanization produces larger cities. Third, bad weather, such as rain and cold winter, can be an inconvenient factor for bicycling. In recent years, worsening air pollution in China has also posed serious health concerns for outdoor activities such as bicycling.

However, since 2012, China’s urban planning authority has been trying to reverse the trend and start a renaissance of bicycling in cities

[1]. Dockless bicycle sharing programs are an interesting opportunity for nimble deployment and subsequent optimization based on big data, without heavy upfront investment in infrastructure, parking docks, and location planning. From a Singapore context, it will be interesting to see if bicycle sharing can be a viable option to solve the “last mile” problem here, and how dockless bicycle sharing may be tailored to fit into Singapore’s fine urban planning practice.

– Dr. Andy Zheng, Adjunct Fellow

Key References:
– China Ministry of Housing and Urban-Rural Development, 2012-09-05,《关于加强城市步行和自行车交通系统建设的指导意见》. [link] – Xiaohong Chen, Mobility Solution, 2016-10-28, 《陈小鸿:自行车的复兴与回归》. [link] – China Ministry of Transport, 2016-07-25, 《城市公共交通“十三五”发展纲要》. [link] – China National Bureau of Statistics, 2014, 《主要城市年度数据》. [link]