Firms vie for clients as co-use business accelerates

As the sharing economy in China thrives and gives rise to a wide range of new businesses, competition in the domestic market is getting fiercer, especially in the bike-sharing sector.

Bluegogo International Inc, which used to rank as one of the top three Chinese bike-sharing companies, has gone bankrupt and reportedly owes nearly 200 million yuan ($30 million) to bicycle makers. On Nov 16, Bluegogo founder Li Gang admitted in a post on social networking platform WeChat that the company has faced severe operation problems.

In October, China's first listed bike-sharing firm, Changzhou Youon Public Bicycle System Co Ltd, said it would acquire Shanghai-based bike rental brand Hellobike, as it attempts to gain more strength to compete with other major domestic bike-sharing companies. The move also marked the first merger in China's bike-sharing sector.

Zhang Xu, a Beijing-based internet analyst, said the dominance of bike-sharing giants Ofo and Mobike has left little room for the further development of smaller bike-sharing companies.

"For small-sized bike sharing firms, the winter is coming. And we will see a new round of reshuffling in the industry," Zhang added.

The bike-sharing frenzy started from and has boomed in China, with dozens of startups providing colorful shared bikes on the streets to enable environmentally friendly, convenient short trips. In July, the Ministry of Transport reported that China had more than 16 million shared bikes, posing serious challenges to city management for local governments.

The flood of shared bikes across the nation has caused traffic chaos and safety concerns in urban areas. Earlier this year, 12 major cities across China introduced bans on new shared bikes.

Guo Jinzhi, chairwoman of the Beijing Bicycle Industry Association, said companies should have taken that into account at the very beginning.

"Companies need to learn a lesson. The key is to better meet consumers' needs and to find solutions to adapt to the changing environment," she said.

With a wide range of products and services flooding into the blossoming sharing economy, similar problems are popping up. Can all products for sale also be sharable?

According to a report in Shanghai-based ThePaper.cn, one shared-umbrella investor is complaining that of the nearly 300,000 umbrellas their company deployed in more than 10 cities across southeastern China, almost none can now be found.

The complaint may illustrate a point emphasized by Zhang, who says the sharing model does not work in every situation.

"Sharing startups need to consider how to actually meet consumers' specific needs and to share suitable items. And they also need to consider the maintenance" for those items, he added.