LINE

Text:AAAPrint
Economy

As bike sharing bubble bursts, manufacturers are hit from all sides(2)

1
2018-07-13 13:42:14Global Times Editor : Li Yan ECNS App Download

 

Great impact

Large bike manufacturers, such as Fuji-ta, benefited from the bike sharing industry, but not all factories were as lucky as them. 

Some suppliers went out of business due to their cooperation with bike sharing firms. 

Yang explained that some bike sharing start-ups couldn't pay their bills to factories last year after the bicycles were made, forcing those factories to shut down. Others lost regular customers in order to guarantee bike sharing companies' orders. 

"Once bike sharing start-ups failed and their regular customers were lost, those bike manufacturers had to go bankrupt," Yang said. 

One of his friends in the town suffered a hard hit last year because of producing bikes for a sharing firm without getting his money back. Yang has never mentioned the words "bike sharing" in front of his friend since then. 

The sharing economy has entered various markets in China, from sharing umbrellas to sharing cars. One of the most successful examples of the sharing economy is bicycles, which first appeared in China's universities in 2015 and then became familiar to public in 2016. 

The industry started taking off in 2017 and experienced unbelievable development. 

According to analyst Sun Naiyue at Beijing-based leading data consulting group Analysys, the estimated capital of bike sharing was 60 million yuan in 2016. This number reached 9 billion yuan within one year, Sun said, with 53.8 million active users. 

Because too many bike sharing start-ups flowed into the market, over-saturation occurred very quickly. As a result, three giants, namely Ofo, Mobike and Hellobike, stood out from over 70 start-ups, according to an Analysys report in May. 

Sun told the Global Times that bike sharing operators and CEOs predicted the over-saturation of the market from the very beginning. 

"That's why they put so many bikes on the market in different cities across China regardless of cost. Even for remote areas like Tibet," she said, adding whoever captured the market rapidly would finally survive the first round of competition.

As a result, many bike sharing firms signed a great number of orders with traditional bike manufacturers, before 21 local governments gradually banned putting unlimited numbers of bikes in cities by this May, Sun said. 

Hundreds of wasted bikes piled up. Some were dumped in rivers. An excessive number of bikes occupied public spaces. After the ban was put into effect, small start-ups could not survive, and were unable to pay their debts to traditional bike suppliers. 

An uncertain future

Even bike makers that did not get burned by the bike sharing bubble experienced a drop in sales. A sales manager surnamed Shao at a bike manufacturing company in Wangqingtuo confirmed bike sharing has delivered a tremendous hit. 

"The sales volume dropped from 200 to 20 bikes per day in our company after the bike sharing industry boomed," she said. "We used to sell this type of bike for 400 yuan, but now we sell it for 100 yuan."

Analyst Sun proposed a solution which may explore cooperation opportunities for traditional bicycle manufacturers and bike sharing firms. Since the government asks operators of shared bikes to recycle and maintain damaged bikes, manufacturers could help repair and recycle these bikes in future, she said. 

However, Wangqingtuo locals seem to be not confident of the industry revival. Most locals in the town don't welcome the bike sharing industry any more. 

Yang's friend surnamed Ren, who is also running a bike company, called this July "a cold summer." 

These days, the two middle-aged men spend time chatting on the streets instead of supervising workers in factories because there were few deals. Yang gave his 40 workers many more extra days off since he hasn't received enough orders. 

"June to September should be the peak season," he said, looking at empty trucks going back and forth on the road.

"But according to this year's trend, sales volume may continue to go down."

To find a way out, some owners in Wangqingtuo are buying the scrap bikes owned by bankrupted sharing companies, and reselling them at a higher price.

A manager surnamed Zhang, who lost money producing bicycles for bankrupt sharing companies, told the Beijing Youth Daily he is buying scrap bikes at the low price of scrap metal, and reselling them. 

"Now I sell Kuqi bikes and Bluegogo bikes for 240 yuan… The price is negotiable. Otherwise, I have to sell them at the price of scrap metal for around 20 yuan per bike," Zhang said. 

He is now sending people across the country to look for discarded bikes and has collected 70,000. Half of them have been successfully resold. Meanwhile, Zhang is looking at the bigger market of reselling the bikes across the country.

  

Related news

MorePhoto

Most popular in 24h

MoreTop news

MoreVideo

News
Politics
Business
Society
Culture
Military
Sci-tech
Entertainment
Sports
Odd
Features
Biz
Economy
Travel
Travel News
Travel Types
Events
Food
Hotel
Bar & Club
Architecture
Gallery
Photo
CNS Photo
Video
Video
Learning Chinese
Learn About China
Social Chinese
Business Chinese
Buzz Words
Bilingual
Resources
ECNS Wire
Special Coverage
Infographics
Voices
LINE
Back to top Links | About Us | Jobs | Contact Us | Privacy Policy
Copyright ©1999-2018 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.