For its first six months of existence, Bluegogo, China's third-largest bike-sharing firm, dumped 600,000 bicycles into cities. Twenty million people signed up to use them; investors showered the company with $58 million in funds. But with rental rates as low as $0.07 per half-hour, Bluegogo's days were numbered and the company folded. In an apologetic letter, its CEO conceded that he had been "filled with arrogance."
He's not the only one. In the space of 18 months, dockless bike-sharing has become one of the hottest investment trends in China, with the two biggest players each having raised over $1 billion in venture funds, respectively. That money has funded a revolution on China's traffic-choked city streets, giving urbanites a low-cost, carbon-free means to get around quickly. What it hasn't produced is a viable business model. A little over a year into China's bike-sharing boom, the industry's future looks precarious.
Barely two years ago, the idea that bicycles would return to China's cities in a significant way would have seemed absurd. Bicycle commuting, commonplace in large Chinese cities as recently as the late 1990s, was viewed as pre-modern, down-market and a nuisance. Cities had been redesigned to facilitate automobiles, not bikes or pedestrians. For those who couldn't or wouldn't buy a car, China embarked on the biggest mass transit build-out in history.