How Mobike Has Achieved Success in China

Hi there! Welcome back to my blog!

In this blog, I would like to explore a once red-hot phenomenon ― bicycle-sharing system industry. Through one of the most representative companies within the industry, Mobike, I will critically evaluate the digital business model it has used to help lead it to its prosperity in China.

If you walk on a street of any main cities in China, you may be shocked by the colourful sharing bikes aligned parking around. Different colors of bikes represent their different owner companies ― Mobike, Ofo, Bluegogo, hellobike, … These sharing bikes have not only constituted a ‘rainbow like’ street view of China, but also implicated an enormous market capital and great profitable potential.

Amongst the diverse bike-sharing companies in China, Mobike is arguably the most successful one. First launched in Shanghai in 2016, Mobike has since expanded into 160 cities around the world (Mobike, 2020). Before it was eventually purchased by a giant Chinese delivery company, Meituan, for $2.7 billion in 2018, it had raised more than $900 million from a number of investors such as Tencent, Foxconn, Hillhouse Capital and Warburg Pincus (Liao, 2019). In light of the financial performances, Mobike has been considered as successful in China.

How it works?

Mobike claims the mission of itself as ‘the perfect first & last mile solution’ (Mobike, 2020), which means that commuters may face the issue of being stuck a bit too far from their destination to walk, but too close to justify the cost or delay of hiring a taxi. Mobike is operated via an application of our smartphone, connecting commuters and the bikes, which are produced by Mobike’s manufacturers. The basic rationale of how it works can be seen from the below video and the image of its business model:

What makes it successful?

Circular Economy

Above all, although Mobike belongs to bicycle-sharing system, it is actually circular economy, rather than sharing economy. According to the definition from Investopedia, sharing economy is an economic model based as a peer-to-peer activity of acquiring, providing, or sharing access to goods and services (Chappelow, 2019). All the bikes that Mobike owns are produced by their cooperative manufacturers, but not the private assets of individuals. It is seen as a circular economy, because from the beginning of design, Mobike has sought to provide the energy saving and emission reduction of the whole life cycle of the bicycle (Mobike, 2020). In July 2018, it took the lead in proposing and implementing the ‘full life cycle environmental protection concept’, through the ‘3R’ principles (Reduce, Reuse, Recycle) carried out within all operating processes, including designing, procurement, production, launching into the marketing, operation, and scrapping (Bikebiz, 2019). Except for the environmental-friendly way of uses, I reckon there are three other reasons that contribute to the success of Mobike in China.

Convenience

As one of the first companies to implement the “docking-free” sharing-bikes in China (Mobike, 2020), Mobike has significantly accelerate the travel efficiency and solve the traffic congestion to people with a relatively low cost. The dockless parking feature is enabled by a GPS tracker so that customers can use their smartphones to locate, pay for and drop off their bikes in convenient locations. From my using experience, by making a deposit of CN¥99 and spending CN¥1-2 per hour, users can readily find available bikes nearby. All the bikes could be picked up and dropped off at anytime and anywhere without the confinement of the docking station, providing great convenience and user experience.

Collaboration

Despite that the sharing-bikes system has brought disruptive impact to bicycle retailers to certain extent, Mobike has been closely collaborating with a large number of different bicycle manufacturers all over China (Mobike, 2020). The digital business model of Mobike has not thoroughly subverted the whole traditional bicycle production industry. On the contrary, it helps add value by helping standardize the operation of bike sharing process, maximize bike utilization and promote the development of bike manufacturing industry (Gray, 2017).

Maintainability & Repairability

The condition and performance of the bike is monitored by “Internet of things” (IoT) technology which alerts Mobike when repairs are necessary (Please refer to my first blog if you are curious of what ‘IoT’ is!). Moreover, full-time maintenance teams are distributed to each city where Mobikes are in working to repair the bikes and conduct termly examining. As a result, the quality of Mobikes and the safety of their users can be secured and ensured.

In short, Mobike as a representative of circular economy has significantly solved the problems of waste of resource from production and scrap, air pollution, and helped to cope with traffic congestion and the digital disruption threatened to traditional bicycle manufacturers, through the way of how its digital business model works in China, which has led to a success. Although the bike-sharing system is still away from perfection, it is worth to noting its improvement and evolution within the future in digital economy era.

References list:

Bikebiz.com (2019) ‘Analysing the bike-sharing economy’. Retrieved on 5.3.2020 from https://www.bikebiz.com/analysing-the-bike-sharing-economy/

Chappelow, Jim (2019) ‘What is the Sharing Economy?’. Retrieved on 5.3.2020 from https://www.investopedia.com/terms/s/sharing-economy.asp

Dong, Tongjian. et al. (2017). ‘China to Roll Out Together Rules on Bike-Sharing Deposits’. Retrieved on 5.3.2020 from https://www.caixinglobal.com/2017-05-23/china-to-roll-out-tougher-rules-on-bike-sharing-deposits-101093496.html

Gray, Alex (2017). “China’s ‘Uber for Bikes’ Model is Going Global”. Retrieved on 5.3.2020 from https://www.weforum.org/agenda/2017/06/china-leads-the-world-in-bike-sharing-and-now-its-uber-for-bikes-model-is-going-global/

Liao, Rita. (2019) ‘Bike-Sharing Pioneer Mobike is Retreating to China’. Retrieved on 5.3.2020 from https://techcrunch.com/2019/03/08/mobike-lays-off-apac-team/

Mobike.com (n.d.) Retrieved on 5.3.2020 from https://mobike.com/uk/

Tetsurokondoh (2018). ‘Business Model Diagram’. Retrieved on 5.3.2020 from https://steemit.com/business/@tetsurokondoh/9-businessmodels-in-2017-that-were-impressive-businessmodeldiagram

Youtube (2018). ‘How to Mobike’. Retrieved on 5.3.2020 from https://www.youtube.com/watch?v=Oz72w0VZaAc