(Chinese Version)

　　Recently, ofo announced that it had raised RMB 450 million in D round of financing led by Macrolink Group. However, Macrolink announced that it invested over $300 million (instead of $ 450 million) in its WeChat Official Account announcement, leading many analysts to doubt if ofo was being exaggerating. Afterwards, ofo responded that this round of financing involved both equity and bond financing and the total investment volume was indeed $450 million.

　　Despite ofo’s clarification, we don’t know exactly the truth. In this article, I’d like to go beyond the surface and explore if online bike-sharing can create another capital bubble as big as online ride-sharing.

　　Will online bike-sharing platforms also face severe government control after years of hard fights? Will online bike-sharing platforms, even with a capitalization of over 100 billion RMB, really benefit capital investors in turn after spending billions of RMB on the market?

　　The future is bright, but the road is tortuous

　　As population and automobiles continue to rise, as traffic is getting increasingly heavy in Chinese cities, as potential capacity of automobile has been fully explored by the previous online ride-sharing battle, online bike-sharing has become the new favorite in the Chinese tech world.

　　In major cities, bikes in yellow, orange, blue, white and green, can be seen almost everywhere on the street. It seems that these bikes emerged all of a sudden, adding a new beautiful scenery to Chinese cities. Some media even made jokes, calling for entrepreneurs to enter the market as soon as possible; otherwise, there won’t be much color left. However, a new type of yellow and blue bikes entered the battle just recently. What a slap in the face!

　　Now that both the capital market and the public welcome online bike-sharing, is it really a promising business? Well, it depends. After all, online bike-sharing platforms can never get away with huge operating cost and uncertain government policy.

　　Although Chinese online bike-sharing platforms are entering one after another new city every other day, I believe their competition are still at the primary stage. Gradually, they will have to face more practical problems and focus more attention on improving user experience and enhancing management mechanism.

　　Although an online bike-sharing platform can boast that it has entered over 40 cities, what matters more is its penetration rate in major districts in every city. Although its market capitalization is rising, its influence on ordinary people’s everyday life might not be as significant.

　　Screenshot of some Chinese online bike-sharing APPs

　　On the surface, it seems that shared bikes can be used on various scenarios. In fact, however, they are highly fragmented. Since users will open the APP only when they need to rent a bike and close the APP once they’ve finished the trip, it’s difficult to add more services in the process and retain users.

　　Although an online bike-sharing platform can expand rapidly at the first stage through sharing economy model and achieve breathtaking growth rate as to the number of registered users, it is foreseeable that as more players enter the battle, this market will soon become saturated. Due to limited high-quality market, the Chinese online bike-sharing market might soon reach the bottleneck. At that time, the core goal for any online bike-sharing platform will be to increase using frequency and time as much as possible.

　　Most importantly, new players will have to think clearly, especially as to how to effectively increase using time, before entering this market.

　　Rapid growth & uncertain profit outlook

　　Some conspiracy theorists might say that online bike-sharing platforms can earn a fortune simply through deposit (Note: users have to pay a deposit of 299 yuan and 99 yuan before they can rent bikes via Mobike and ofo, respectively). Since users will always need to rent bikes, their deposit will always be kept to online bike-sharing platforms.

　　According to iResearch, Mobike’s WAU in the first week of 2017 reached 5.849 million. Since each user has to pay 299 yuan as deposit, Mobike will have accumulated around 1.76 billion RMB simply through deposit. Moreover, it is expected that this figure will continue to rise rapidly.

　　However, although online bike-sharing platforms may be able to use the deposit for other purposes at the primary stage, they will have to set up a special account, so that the deposit shall be used exclusively for its designated purpose. As the market gets increasingly mature, they will have to do so whether to be responsible for users or in consideration of possible government regulations.