On February 28th, Mobike signed an agreement with China Merchants Bank (CMB), so that the latter will take full charge of the escrow account and make sure the deposit is managed in accordance with government laws and regulations. Recently, Bluegogo also announced that users’ deposit will be kept on mobile payment platforms and shall not be used for other purposes. It is expected that other platforms will follow suit in the near future.

　　Now that online bike-sharing platforms can’t make profit through deposit, how can they become profitable as fiercer market unfolds? Although Hu Weiwei, CEO of Mobike, stated in an article that she would take Mobike as charitable project if she failed, running a startup is absolutely different from managing a charity organization. After all, she has to pay back investors’ billions of investment.

　　To make profit, online bike-sharing platforms might have to focus on rent fee users pay for each trip. After they’ve attracted a steady user base, they might be able to increase rent fee, just as Didi did. Although they might give lots of subsidies to users right not, they have to earn back all the money in the end. The only difference is that users might not be as sensitive to the increase of bike renting fee (for example, from 1 to 2 yuan) compared to that on Didi.

　　Suppose an online bike-sharing platform, with a DUV of 20 million, increase its basic rent fare from 1 to 2 yuan, its daily, monthly and annual transaction volume will reach RMB 40 million, RMB 1.2 billion and RMB 14.6 billion, respectively.

　　From this aspect, it might be a really lucrative business. If we take into consideration full screen ads fee, recommendation fee for business owners, etc., its annual income might reach at least RMB 15 billion, ideally. Although if we take into consideration the huge operation cost, including bike maintenance, bikes’ service life and labor cost, there might not be much net profit left. After all, offline operation cost has always been an unbearable burden for such internet plus mode-based startups.

　　Government control may become the biggest challenge

　　Government’s uncertain attitude has always been a headache for Chinese entrepreneurs. Didi is a recent warning. Although the Chinese online bike-sharing market is burgeoning right now and the government’s attitude seems to be positive, nobody knows how the market will develop in the future and if government will interfere in in case of accidents.

　　In a recent interview, China’s Transport Minister Li Xiaopeng was positive about online bike-sharing, believing that “it represents innovation in urban low-speed transportation system and achieves internet plus transportation model.”

　　“Since it is highly effective in meeting the public’ needs for last-kilometer transportation, it is warmly welcome by the public. In fact, many people are willing to give it a try this new means of transportation. Therefore, I believe we should encourage and support online bike-sharing,” said Li.

　　In other words, the Chinese government is positive about online bike-sharing, at least for now. However, as the market continues to expand, chaos is inevitable.

　　As a matter of fact, the Chinese online bike-sharing market is development in a barbaric manner. Based on incomplete statistics, over 200,000 shared bikes have already been launched in Beijing. Based on Mobike’s public data and Shanghai Bike Industry Association’s prediction, over 500,000 shared bikes will be launched in Shanghai by the first half of 2017. In fact, many online bike-sharing platforms claimed at the beginning of 2017 that they would launch 1 million in total shared bikes on the market in 2017.

　　Barbaric development begets accidents. For example, too many shared bikes parked randomly on the street might severely affect traffic order. Conflicts might occur after bike accidents. Conflicts of interest might also occur between online bike-sharing platforms and existing offline bike-renting platforms. Users might complain if basic rent fee is raised. It is likely that the government’s attitude towards online bike-sharing may change one day and government control will ensue.

　　Since online bike-sharing platforms, to some degree, are taking on government’s responsibility. It is likely that the government may invest in, or give subsidy to service providers. It is also likely that poor operation performance of these platforms may undermine local government’s performance ratings, forcing the government to interfere in.

　　Henceforth, it is unlikely that the Chinese online bike-sharing market will accommodate too many players at the same time. It is more likely that only a couple of players will survive and stand out at last.

　　Conclusion