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Tech, Venture Capital

Shanghai Puts Breaks on Bike Share Frenzy, Asks Mobike, Ofo To Temporarily Halt Bike Placement

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The Shanghai government has asked six bike sharing companies including Mobike and ofo to temporarily suspend bike placement in the city’s central districts, saying shared bikes have reached saturation point in those areas. The move may put the breaks on a venture capital-fueled bike sharing frenzy taking place in China. It also highlights regulatory risks faced by Chinese start-ups.

The Shanghai Transportation Bureau also asked four unnamed shared electric bike companies to immediately stop vehicle placement, as a number of shared electric bike and scooter start-ups emerged this year to join crowded city streets, according to Chinese state media reports.

As of February, there are over 30 bike sharing companies operating in Shanghai, having placed over 450,000 bikes in the city. These are over 4.5 million users of shared bikes and vehicles in the city, the highest in China, according to the reports.

Nearly half a billion U.S. dollars have been invested into dozens of Chinese bike sharing companies, with most of the money injected in two market leaders, Shanghai-based Mobike and Beijing-based ofo.

Others including Hellobike, Qibei Tech, Ubike, Youon Bike and Yiming Bike have also raised venture funding. All of these companies have plans to enter hundreds of cities in China and place millions of bikes on city streets.

In China’s big cities such as Beijing, Shanghai and Shenzhen, overflows of shared bikes are frequently seen and bikes are often left unused.

Shanghai is considering to strengthen oversight and regulation of the bike sharing sector, including potentially implementing real name registration systems, setting up fixed shared bike parking areas, and managing the number of bike placements in the city.

A national bike sharing standard is also currently being drafted by industry associations. A Mobke representative told Chinese media that it advocates bike sharing companies to meet certain entry criteria, such as having GPS positioning capacity and decade operational and repair capabilities.

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