In a year, bike-sharing became a 20-billion-yuan business. Now regulators have their eye on the bicycle nobody used to police

One city after another is writing rules, and the bike-sharing companies are using technology to keep their bikes from piling up.

Last Saturday, a few hundred meters south of the CCTV building in Beijing, several Mobike workers were lifting bicycles off a small tricycle cart and setting them down in a roadside parking zone. A dozen meters away, workers from another bike-sharing company, ofo, were doing the same thing.

For the past few weeks, their entire job has been one task: hauling bikes, load after load, from the bus stop on the south side of the road to the north side.

The workers explained why. Many people who work around Guomao ride a bike to the Babaofen East bus stop on the south side to catch a bus home to Tongzhou. When they come back into the city, they get off on the north side. So every day the bikes pile up on the south side, and there are none left near the subway entrance on the north.

But they weren't moving them fast enough.

Last Thursday, Beijing Youth Daily reported on the pileup here in a story headlined “A Thousand Shared Bikes Besiege a Bus Stop; Bikes in the Road Break Up Queues on the Platform”. A day later, Beijing's traffic authorities sent people to haul away the shared bikes parked nearby.

An official at the Beijing Municipal Commission of Transport afterward said that both the companies and their users bear responsibility for bikes parked where they shouldn't be, and that the commission was drafting rules for shared bikes.

Since the end of last year, news like this — bikes impounded — has not stopped.

The biggest case was in Shanghai. In late February, a vehicle management company in the city's Huangpu district took away more than 4,000 shared bikes, saying they were squeezing out residents' parking space. Two weeks later, Shanghai issued a set of bike-sharing rules drafted under the lead of the Shanghai Bicycle Industry Association.

The rules set out detailed requirements for the operators and their bikes: GPS positioning, smart locks, mandatory retirement after three years. They even specified that riders must be between 1.45 and 1.95 meters tall.

Less than a year after the business took off, Chengdu, Nanjing and Shanghai have all issued trial rules or draft rules for public comment this month.

Shared bikes are now in more than 40 Chinese cities, with over 2.35 million bikes on the street

Bike-sharing took off as a way to get around after Mobike arrived in Beijing in August 2016.

In a single year, 30 apps offering the service have appeared. By incomplete count, shared bikes are now in more than 40 cities across China, with more than 2.35 million bikes deployed.

Since the end of last year, reports of shared bikes being seized have started to appear.

The first to haul bikes away were the urban management officers in Chengdu. On November 29, officers in Chengdu's Huayang subdistrict confiscated 204 shared bikes, on the grounds that the companies had violated the clause in the Chengdu Municipal Regulations on City Appearance and Environmental Sanitation that forbids “carrying on business activities that occupy city roads.”

A month later, Chengdu became the first city to publish Technical Guidelines for Non-Motorized Vehicle Parking Areas in Public Spaces of Chengdu's Central Districts. It spelled out where parking could be marked off — sidewalks along main roads, secondary roads and small streets, residential and commercial streets, and the ground near buildings along a street. It also named the places where bikes may not be parked, including within 30 meters of a subway entrance.

From January this year, word of city governments seizing bikes began coming out of other cities too. Urban management bureaus did most of the seizing.

The urban management bureau of Ningbo's Yinzhou district said in an interview that before Spring Festival it had received complaints from residents that shared bikes were blocking the sidewalks in the southern business district, so it acted and took the bikes away.

In late February, more than 200 shared bikes were impounded from the parking lot of the International Finance Center at Nanjing's Xinjiekou; the Xinjiekou management committee took them, citing bad parking or damage.

At almost the same moment came the largest seizure of all, in Shanghai. A vehicle management company in the Huangpu district took away more than 4,000 shared bikes, saying they were squeezing out residents' parking space. Two weeks later, Shanghai issued the bike-sharing rules drafted under the lead of the Shanghai Bicycle Industry Association.

In early March, urban management officers in Haikou's Meilan district took away 38 shared bikes for bad parking. And a few days ago, because too many bikes were crowding a bus lane, Beijing's transport authorities, together with the traffic police and the Chaoyang district government, removed the shared bikes beside the Babaofen East bus stop.

Fast expansion has drawn the regulators' attention

The two biggest bike-sharing companies were careful about city management when they started out.

ofo began on college campuses, and until it raised its Series C it had no plan to move into cities at all.

Back then ofo's CEO, Dai Wei, mostly talked about using the project to deal with abandoned “zombie” bikes: work with universities, take the bikes rotting on campus, fix them up and put them back in students' hands.

Mobike aimed at cities from the start, but its first months were slow as well. Going from Shanghai to Beijing took four months.

From the beginning, Mobike worked hard to get users to ride and park by the rules. Its credit-score system had two provisions aimed squarely at that. Park in the wrong place once — inside a residential compound, in an underground garage, anywhere other than a roadside white-line zone or a designated bike-parking area — and you lose 20 credit points. Drop the bike and run after the traffic police stop you for a violation, and you lose 50, a heavy penalty in Mobike's system.

It also took its relationship with government seriously. In June 2016, with 10,000 bikes already on the street in Shanghai, Mobike signed an agreement with the Yangpu district government to jointly manage maintenance and parking. It was the first bike-sharing company to work with a city government.

Then the money arrived, and the business changed fast.

From last September on, funding announcements came one after another — tens of millions of yuan, then hundreds of millions of dollars. Bikes in every color turned up at the curb.

To grab market share, every company that raised money expanded at speed.

ofo moved fastest. In the six months since it began putting bikes on city streets, it has reached 46 cities, 11 more than Mobike.

ofo, which just raised $450 million, has also spent this year giving rides away to pull in users. If you were in Beijing, ofo charged for rides on only seven days in all of March.

All that expansion meant flooding the streets with bikes to win users, which is exactly how bikes end up heaped in certain spots.

That worries the companies too.

A single Mobike or Bluegogo bike now costs more than 1,000 yuan to build; even at eight rides a day, it takes a year to earn that back. Every bike sitting idle is burning money.

Mobike, ofo and Bluegogo all track how their bikes are being used and send crews out to move them so fewer sit unused. The same data guides where new bikes go.

But money kept coming in, expansion kept accelerating, and their dispatch systems are still immature. Since the start of this year, press coverage of bikes piling up and blocking roads has grown.

People's Daily and Xinhua have both run commentary more than once on the problem of regulating badly parked shared bikes.

An employee at a bike-sharing company who handles government relations in a second-tier city told us he thinks the bad press makes local officials wary: they don't want negative news making trouble for the way they run their city.

Meanwhile, a bicycle business that once had little money and drew little notice has become a place where enormous amounts of capital have collected.

Mobike and ofo alone have raised about 7 billion yuan between them. That is far faster and far larger than Didi and Kuaidi at the same point in their lives: a year after launch, the two of them had raised only about 200 million yuan.

Beyond urban management, the traffic police have come out as well.

In late December last year, Chengdu traffic police ran a campaign against cycling violations, warning riders who broke the rules but not fining them. On January 10 and 11 this year, in Shenzhen, which had already published a draft management plan, traffic police ran a campaign of their own, aimed at cyclists running red lights, riding against traffic and pulling into motor vehicle lanes. In two days they wrote up 733 shared-bike violations.

Over the past two months, plenty of photos of a first-ever traffic ticket have shown up on Weibo, mostly from users in Nanjing and Shanghai.

Of these cities, only Shanghai had long enforced bicycle rules strictly. The other three had barely policed how cyclists rode.

Cities are starting to legislate, at a rhythm much like the ride-hailing rules

Just as local governments rolled out ride-hailing rules last October, this year they have begun publishing draft rules for shared bikes.

They are reacting much faster this time. Uber launched People's Uber in August 2014; local governments did not start putting out draft rules until October 2016.

Guangzhou, Shanghai and Beijing all took up the management of shared bikes during their local Two Sessions.

At a State Council Information Office press conference on February 27 this year, Minister of Transport Li Xiaopeng said plainly that the government had to take steps to deal with shared-bike services and with bikes that go unrepaired. A few days later, at the National People's Congress, Shanghai party secretary Han Zheng said that for Shanghai, which already holds 450,000 shared bikes, the government would “gradually bring in institutionalized regulation.”

Since the start of March, Chengdu, Nanjing and Shanghai have each issued specific rules or drafts for comment. Counting the Opinions on Encouraging and Regulating Internet Bicycle Services (Draft for Comment) that the Shenzhen Municipal Transport Commission released on December 27, four Chinese cities now have trial rules or drafts for shared bikes.

The trial rules Chengdu issued in early March require GPS on the bikes and real-name registration by users. Nanjing, whose draft came later, is stricter still: it wants both of those, plus license plates on the bikes.

As with the ride-hailing rules before them, each city adds requirements by borrowing from other cities' drafts.

The strictest is the Shared Bicycle Service Standard Shanghai issued last week, which orders bikes retired after three years and specifies that riders be between 1.45 and 1.95 meters tall.

Beijing has not issued a policy yet, but a manager at one bike-sharing company, who asked not to be named, said that from what they have heard, the policy being drafted will not go easy. An official at Beijing's transport authority revealed only last week that both users and companies would be fined for parking bikes where they shouldn't.

Regulation like this is not only a Chinese problem. Bike-sharing companies pushing overseas have met resistance too.

In the middle of this month the San Francisco government put forward a bill requiring bike-sharing operators in the city to apply for a permit, on pain of fines and impoundment — the same attitude the city first took toward Uber.

Bluegogo started putting bikes on the street in San Francisco at the beginning of the year and was ordered to stop. Bluegogo's CEO, Li Gang, told us the company is applying for the permits now and expects a license in April. The application asks for a great deal: detailed plans for product quality, management systems and operations, all filed with the government.

The government is treating shared bikes as if they were public bikes

The draft rules keep getting more detailed. Several cities demand GPS on every bike; Shanghai has proposed that operations staff number at least 5 for every 1,000 bikes.

But shared bikes are not public bikes. They are a bike-rental service that technology has made faster and easier.

They are to public bikes roughly what Didi and Uber are to taxis. To pick up passengers on the street, a traditional taxi had to be painted a standard color, carry a meter and be driven by someone with an operating license. Given the technology of the time, city regulators needed those measures to supervise taxis, keep passengers safe and stop drivers from charging whatever they liked.

Once apps like Uber and Didi arrived, identity could be checked through a phone, and the phone's GPS could track the driver directly, making sure he wasn't taking the long way around with a passenger in the back. Better mechanisms replaced the old safeguards.

Nor are they taxis flagged down at the curb. They are a booking service with more accurate location and shorter waits — every ride ordered on the spot is a booking.

After a long run of conflicts, the ride-hailing model has been accepted, to different degrees, by cities all over the world.

Shared bikes are the same. At bottom this is a bicycle-rental business. And there are already clear rules for cyclists who run red lights or ride on sidewalks and tactile paving.

Whether to fit GPS to your bikes, whether 1,000 bikes need 5 people or 1 — these were decisions for the market. The government never made demands like this of the companies that rented out bicycles before.

Mobike has 100,000 bikes in Shanghai. Under the rules the Shanghai Bicycle Industry Association produced, it would need 500 full-time operations staff in that city alone.

As for barring anyone over 1.95 meters from riding a shared bike, that is simply silly.

The government is, in fact, treating shared bikes exactly like public bikes.

Some local governments are studying a single back-end management system for shared bikes. Qiqi Chuxing, which supplies technology for public bikes and shared bikes, told QDaily that Beijing, Shanghai, Guangzhou and Shenzhen have all approached it about building such a system. The company thinks the government may eventually put out one app of its own that connects to every bike-sharing brand and runs them all.

There are also some questionable interests tangled up in the writing of these rules.

Several bike-sharing companies, for instance, helped draft the shared-bicycle service standard that the Shanghai Bicycle Industry Association led this month.

But the association's president is Yan Yiming, chairman of the bicycle maker Forever. And Forever has invested in Youbai Bike, which puts shared bikes on the street in Shanghai, holding a 12.6 percent stake.

Referee and player at once. The same thing happened when cities wrote their ride-hailing rules.

As policy tightens, the companies are adjusting faster

The new rules are not good news for ofo, whose bikes mostly still have no positioning.

That already exposes it to policy risk wherever rules have been issued. Asked about Chengdu's requirement that shared bikes carry positioning, ofo said it was “not convenient to comment at this time.”

But it is clearly moving faster on hardware. At an event two weeks ago announcing its tie-up with Sesame Credit, ofo's head of Shanghai operations, Ou Jing, told us that smart locks with GPS were already out in Beijing and Jinan and would reach Shanghai this month. Last Friday, ofo and Qibei Bike announced the ofo L1, which carries GPS and has started going out in Hangzhou.

Bluegogo, which already has 100,000 bikes in Beijing, unveiled a new one last week, the bluegogo Pro.

At the launch, Li Gang stressed that it uses BeiDou ground-based augmentation to locate a bike to within a meter. The design is also meant to nudge riders into parking where they should.

In earlier interviews, executives at both Mobike and ofo said one person on their operations team could look after more than a thousand bikes. Both are now reaching for more technology to manage them.

After Xiamen published its Guidelines for Setting Up Bicycle Parking Areas (Trial) in March, Hellobike quickly launched virtual parking spots in the city's Jimei district. There, a Hellobike ride only ends, and only settles up, when the rider leaves the bike in a designated area. Liu Fang told us that with the BRICS summit coming to Xiamen this year, the local government cares a great deal about how the city looks, and that when Hellobike moved in, it promised officials it would use this technology to govern where users park.

Xiaoming Bike began testing similar virtual parking spots in Guangzhou in early March. Mobike and Youbai Bike are working on the same thing.

And last week, the day before Shanghai published its draft rules, Mobike paid for a “red-envelope bike” promotion out of its own pocket — cash handouts to coax ordinary riders into taking bikes out of the places where they had collected.

The companies all have the same idea: use technology to guide where people park, and cut the cost of moving bikes by hand.

But if the government handles shared bikes the way it handled ride-hailing, they may already be out of time.

Graphics by Feng Xiuxia

Cover image: Wikipedia