Just a year ago, Chinese company Mobike launched in Shanghai the first “dockless” bike-sharing scheme with fully digitalized experience: through an app, pedestrians could now find a bike parked nearby and simply unlock them, by scanning a QR Code or a plate and entering a password, to use it at will. One year later, the excitement from the general public about those dockless bikes inspired other startups to develop their own version and different brands - such as Ofo or Bluegogo - can now be seen in a dozen of cities in China. According to statistics from the Shanghai Bicycle Association, 280,000 dock-free bikes and 80,000 public bikes were launched at the end of February 2017, and are expected to reach 500,000 in the second quarter of this year.

bike-sharing: from dream to nightmare

The limits of the bike-sharing system

Although a completely free from physical infrastructure means of transportation seemed a really good idea once, a variety of problems linked to the proliferation of bikes are now emerging and are receiving much concern from the public. Among them, vandalism is increasing with “lost” saddles and handles or QR Code “scratching” making the bike unusable. There’s also a problem of installation of personal locks that prevent other users from operating the bicycles. But the main issue right now relies on the “park wherever you want” motto. Recently, piles of bikes have been seen “blooming” here and there in the cities, some are parked in the middle of the sidewalks and others dumped far from footpaths. Local authorities started confiscating but the need for solution is becoming time-sensitive.

Anticipating couldn’t prevent the problems - credit scoring might



will be on the streets by mid-2017

As a matter of fact, bicycle sharing companies were the first to anticipate the problems that were to occur. For instance, to control user bad behaviour, Mobike set up a “credit point” system to each user, which aim to reduce inappropriate use of the bikes. As a sanction to multiple misconducts, Mobike would charge an excessive fee when the users’ points drop below a standard. As for Ofo, the company chose a test and learn solution in order to make sure their system would be used adequately: more precisely, it used a university campus as testing ground before expanding city-wide. Initial measures either proved to be ineffective or submerged in the flood of market occupation as the bikes have been recently removed from the campus by authorities. 

We may ask ourselves what other solutions could be deployed... The first idea that comes to mind is increasing the deposit, but it would easily scare off the customers. The second one is actually inspired by a recent partnership between Ofo and Sesame Credit. Indeed in support of the Chinese government, Alibaba’s affiliate company Ant Financial build a pretty sophisticated credit investigation system: Sesame Credit. Sesame Credit gives a credit score to each user according to a data evaluation based on profile, history and behavior. This partnership between the two companies allows Sesame users to ride Ofo Bicycle with no deposit once their score is above a standard. Beyond the deposit-free service, integrating Ofo user data into Sesame could be a solution to prevent user’s bad behaviour through detterence. Yet this solution hasn’t been seen from the current reports. 

What’s interesting here is that Sesame Credit is part of the Social Credit System the Chinese government has introduced 2 years ago. Indeed, even though it was first mentioned in 1997, the Chinese government recently accelerated the development of this national social scoring by introducing market mechanism and collecting records from more diversified channels. Connecting one another might be a way to universalize the concept as the Social Credit System integrates also recorded traffic offenses and train fare evasions. As no bike-sharing related regulations have been released yet, this solution will require more time for further research. But as it is part of the urban traffic, we might expect to see this industry quickly included into regulatory scope, with tighter controls both for companies and users.

the more the bikes, the more the problems

gathering bikes in one place


Invisible fences to solve parking issue

Apart from the integration of credit system, digital tools are also becoming a solution for bike-sharing companies. Xiaoming, for instance, has recently been testing e-fences technology in Shanghai. By detecting the signal transmitted from the chip integrated inside the bikes, the company is able to triangulate where the bike is parked. When the rider do not park in designated area, a vocal reminder will be sent to him through the Xiaoming app. Also, the app won’t stop billing the user until the bike is parked in the area. To minimize the impact to user experience, Xiaoming will only deploy increase these e-fences in densely populated area nearby CBDs or metro stations.. Everywhere else the system will not force riders to park within the e-fence area. Other players are also exploring this technology: both Mobike and Ofo are developing location-based service e-fence solutions by integrating GPS and BDS (BeiDou Navigation Satellite System developed by China) technologies into their smart locks. Due to bikes’ small size and to distance error, the two companies are indeed looking at solutions that are more precise in order to optimize the e-fence technology in their apps.

will e-fences save  bike-sharing?

Improving bike sharing

In the current stage, some people consider these initiatives as a threat to user experience which will drive customers to other competitors as a consequence. The parking issue, however, is the main problem bike-sharing companies are facing and has to be solved quickly. Thus, one step further to develop a uniform parking standard is imperative, and Xiaoming already set the pre-emptive strategy at this point. According to Chen Yuying, the CEO of Xiaoming, “Xiaoming cooperates with a technology company in Guanzhou, and signed an agreement with the local government to jointly set the e-fence parking plan. After a half-year spent on R&D, this technology has applied for dozens of patents, and will be accessible to other bike-sharing companies in the future. Meanwhile, the parking data will provide to government with the basic data for smart city management.

Locks and regulations as a means to prevent accidents

'Other stakeholders will have to intervene as bike-sharing companies are part of the smart city ecosystem'

Ofo also has a problem with its locks as users tend to tamper with them or keep them open on purpose, leaving the bikes available for kids to play with them. Indeed Ofo installed in its bikes mechanical locks with a fixed unlocking code so that they could cut costs. The good news is that the company recently launched a new version of its bikes including a smart lock that open with a random code. According to some reports, however, Ofo still put a lot mechanical lock bikes into the market. 

For a company, it’s always a dilemma to keep the balance between social responsibility and enterprise benefit. Apart from the improper usage, other problems including transportation safety, public resources occupation, deposit administration also demand prompt solutions with the participation of different stakeholders. Bike-sharing companies will need to seriously consider whether their strategy is in accordance to the tide and the spirit of the industry, to provide a green and healthy lifestyle to the citizens.

Bike sharing Vigilantes in China
  • 3 min
By Hanna CHEN
Analyst Consultant