China’s free-for-all bike-sharing craze is slowly coming to an end. On Monday, China’s Ministry of Transport put out new guidelines to both encourage and control the bike-sharing industry, which took off about a year ago.
Overall, the guidelines are very positive. They point at traffic congestion and the problem of “last mile” transportation – such as going from the metro to your final destination – as issues addressed by bike-sharing.
But the document also focused on a few key pain points, such as illegal parking, biker safety, and managing and returning user deposits.
These new regulations could decide which companies come out on top.
In particular, the new guidelines will require companies to offer insurance for their users. Bike-sharing startups will also be responsible for wrangling their bikes through geofencing – which requires GPS-enabled bikes – and penalizing unruly users who park in unsanctioned areas, like in the street or in the middle of pedestrian walkways.
Deposits will also face increased scrutiny. Typically, bike-sharing startups require users to put down a certain amount of money, from US$14 to US$43, before being able to rent bikes. The new guidelines will encourage startups to waive deposits all together and partner with corporates to leverage credit systems instead. Startups that do receive deposits will have to keep company funds and user deposits strictly separate to avoid any misuse of funds.
The guidelines are still a draft and are open to public feedback until June 5th.
Raising the bar
In many ways, the new rules by the Ministry of Transport rehash regulations previously drafted by local municipalities, such as Shanghai, Chengdu, and Shenzhen. Since bike-sharing took off last year, millions of bikes have swamped cities across China. In major cities like Shanghai and Beijing, it’s not uncommon to find sidewalks jammed with bikes of all colors, as different startups vie for market share.
These new regulations could decide which companies come out on top. Requiring startups to geofence their bikes, for instance, automatically favors startups like Mobike, which has GPS-enabled bikes. Ofo, Mobike’s archrival, has had to play catch up in that regard. Similarly, pushing startups to link up with credit systems and waive deposits will also raise the bar for companies.
Ant Financial, Alibaba’s financial affiliate, is already working with various startups, such as bike-sharing unicorn Ofo, to offer deposit-free bike rentals. The fintech company has its own proprietary credit system called Sesame Credit. Users above a certain credit threshold don’t have to pay a deposit. However, Mobike, which is backed by Tencent – a competitor of Alibaba – hasn’t yet tied up with Ant Financial’s credit system.
As with other hot tech trends, from food delivery to ride-hailing, bike-sharing has become a proxy war for China’s largest tech giants. On Mobike’s side, there’s Tencent. Conversely, Ofo is backed by Didi Chuxing – one of Tencent’s portfolio companies – and Ant Financial.
Tech in Asia reached out to Ofo and Mobike for comment and has not yet heard back.
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