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Why Chinese Smart Bike Sharing Systems Failed in Western Europe

October, 2018

Biking is a popular transit mode across developed countries and smart bike vendors have already witnesses higher adoption from urban commuters in North America, China and western European countries. The leading smart bike sharing vendors in China, namely, Ofo and Mobike have already registered a few million rides every day. Due to the competitive pricing models and low-cost of capex and favourable regulations from local transportation authorities, these companies have managed to expand their services in European cities; however, the move has not been lucrative to these companies.

Bike sharing vendors started operations in Europe in late 2016 and little more than a year of operations, in 2018, Mobike and Ofo have faced tough times in Spain, Germany, and UK, which made them to cancel their operations from a few cities such as, Manchester, and Madrid. Also, the companies have shrunk their bicycle availability in multiple districts in these countries.

The primary reasons for the closure of these dockless bikes from the region of operations are vandalism and theft of cycles. However, Santander Cycles, a competitor of Mobike and Ofo in western Europe, has managed to continue their operations successfully as it is predominantly offering docked bikes.

The prime challenge Ofo and Mobike have faced was failing its smart lock technology. Since these companies are offering dockless bikes, smart lock was the only technology that is expected to trace the location of a bike. In case of Ofo and Mobike, this technology has failed significantly, which has allowed for theft and misuse of bikes. Also, breaking smart locks has resulted in over 5,000 missing bikes within a year of operations for these companies.

However, these dockless bike system providers are entering in partnerships with telecom companies such as, Huawei and Vodafone, to develop IoT hardware and software in the smart locks, which is expected to strengthen the operations and security of dockless bike operators.

Considering the current challenges with dockless bike sharing model, bike service providers would need to upgrade their smart lock technology to protect their bikes. This model is expected to be challenging for the operators for the next 2s to 3yrs; however, docked bike sharing service providers are likely to witness stable growth during the same period.

– Srujan,
Research Analyst,
Infoholic Research