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Bike sharing: well that went well.

Publication: 
Editorial Staff
chiefofficersnet

In Kuala Lumpur, Malaysia, there is barely a bike to be seen. In a city that, for an international convention on urban cycling, created cycle lanes that blocked off footpaths (including painting over the bubbled stones to guide the blind) and reduced lanes in already crowded streets, the cycling revolution is all but done. Occasionally, someone passes by on his own bike, something one rarely saw before KL was sold on the idea of cycling. And the latest fad, albeit on a much smaller scale, is tiny electric scooters: it's only a matter of time before someone is killed on them as their riders whizz between traffic, without lights, and on minute wheels that cannot possibly cope with the holes in KL's roads. In a warehouse specialising in buying up the assets of closed businesses, dozens of oBikes rest, dusty and unloved, for sale for only MYR150 - about thirty pounds. Of course, the hazard of buying one is that you can't park it anywhere because so many people think it's a communal asset. The bikes are to be found in drains, tossed on open grass. How did it come to this?

The oBike system is "dockless" and when it was launched, the bikes carried a sign saying that you could pick up a bike at a docking station but leave it anywhere. Docking stations were, simply, yellow boxes painted on the pavement. oBike had collectors who went to pick up bikes and put them into the boxes. Informal docking stations grew up - as in the photo above. Of course, it all relied on an app and some pretty sophisticated tech behind that. First, pay a deposit of around USD25 and then search for an available bike: those nearby were shown on a map. The bike and your phone chat away happily via Bluetooth and when you walk away from the bike, the connection is severed and the bike's position reported via the app. All well and good but, obviously, it didn't work: the number of bikes abandoned across the city became a nuisance. Note "abandoned" not "parked." They were often just dumped, regardless of the obstruction or danger they caused.

In nearby Petaling Jaya, the town council banned a bike-sharing scheme not because of the nuisance factor but because, in an Uber-like move, someone turned up and launched the business without any of the required authorisations.

In KL, the oBike experiment lasted, for all practical purposes, only a few months. Only two months into the scheme, Malaysian website Says.com carried an article called "This is why we can't have nice things" a series of photographs says it all: https://says.com/my/news/obike...

In Melbourne, Australia, the local authority had to remove "hundreds" of the bikes from the Yarra river. In Beijing, the authorities stopped issuing licences after the city became clogged with what appeared to be single-use bikes dumped all over the place.

It is this that, in part, has led to the biggest bike-sharing collapse of all, China's Ofo. The ascendancy of Ofo was considered China's first so-called "unicorn" and it grew, and its apparent value grew, alarmingly. It was, in part, funded by the age-old tradition (that regulators refuse to tackle) of trading using customers' deposits for working capital. This is a major headache in apps and despite the Ofo collapse, it remains so far off the radar of financial regulators that it's a non-topic. In scenes reminiscent of runs on banks, people who had paid their 99 yuan deposit queued outside Ofo's offices demanding their money. That's about USD25 and, if everyone gets their money back, it's more than 1,000 million yuan. Some people, reportedly, paid a deposit of twice the norm. When people reached the head of the queue, after standing in Beijing's freezing December weather, they were told there was no cash and the company would "proceed to refund you," according to local reports.

Ofo's position may be more complicated, though. Its capital structure apparently gives certain investors golden shares under which they have a right of veto over many of the company's decisions. Some say this prevented an even bigger catastrophe, others say it prevented the company developing successfully. Then the money ran out. On 19th December, CEO Dai Wei, one of the founders, said in a letter to employees "In the past six months, cash flow and media pressure have rendered us powerless and discouraged, especially after failing to get funding. I’ve thought about using all the operating capital to pay back the deposits and debts from the suppliers. I’ve even thought about dissolving the company and filing for bankruptcy, so that we wouldn’t have to feel pressured any more." It wasn't as if the company didn't have backers: Alibaba, Didi-Chuxing and Matrix Partners were in there, amongst others.

Back in the land of Boris Bikes, they were eventually replaced by a dockless system, again directly run by Transport for London and now sporting the colours of Santander. They are proper bikes with air-filled tyres, Shimano gears and brakes - and a rather gimmicky front light that's actually a green laser pointer and does absolutely nothing to illuminate the way ahead.

But London has other options: ofo, mobike and urbo. On paper, they are not a failure: the TfL bikes were, it is reported, used 35,000 times on Christmas Day. And earlier in the month, electric bike sharing scheme Lime was launched. Meanwhile, in Manchester, Mobike has said it's had enough of theft and vandalism and it's thinking of pulling out. The company has said that, in summer 2018, every month it lost 10% of its stock went missing or was damaged beyond repair. There were also serious problems in Newcastle and Gateshead.

Mobike has pulled out of cities before: Dallas and Washington DC, for example. The company says those were because they didn't have enough bikes to make the schemes viable, which sounds like a strange excuse.

Ofo withdrew from the UK cities of Leeds, Sheffield and Norwich after only a few months.

A Hong Kong based, investor-led company called Go.Bee put a service, backed by Santander, into Milton Keynes, the UK's first "New Town" and designed, at least in part, for cyclists. Within months, about half the bikes in that scheme had been extensively vandalised costing the company some GBP200,000. In France, it blamed "mass destruction" of its bike fleet. As in the UK, people hacked off the black box which meant the tracking didn't work and then simply repainted them. Go.Bee said that more than 1,000 bikes were stolen and well over 3,000 damaged. Paris was the last place in France the company operated: it had already found similar extensive harm in Lille, Reims and Brussels in Belgium.

But Go.Bee, also known as GoBee.Bike had another problem: intense competition in a small domestic market. Although the company claimed to have 17,000 out of Hong Kong's total 25,000 shared bikes, there is no tradition of cycling in HK. Indeed, it's a positively difficult place to cycle, especially on the Island. The schemes are too expensive to run, too cheap to sell and the demand is not there. The company failed in the middle of last year.

The South China Morning Post said that competition in China was even worse with more than 100 start-ups but only a handful surviving.

In Singapore, where oBike started, the company ceased operations in June last year saying that the Land Transport Authority's regulatory regime was too onerous. The company, reportedly in the grip of massive losses, insisted its markets outside SIN would continue.

In Malaysia, oBike soon abandoned its original plan to allow bikes to be left anywhere. It provided designated parking spots across the city (although it is not at all clear how and what permissions they obtained to do so) and started to tell users "do not park on private compound" (sic) and "do not park on the sidewalk" - a reflection of the company's Singapore origins and the Americanisation of the city state. "Sidewalk" is not a term often used in Malaysia. In a country where pavements are frequently blocked by motorcycles, the changes of oBike changing that habit were always slim.

But it was all for nothing. The website has not been updated for SIN or MY since late 2017. Its facebook page has not been updated since August 2018.

And then there is LinkBike, home-grown in Penang and without aspirations to go global. In November last year, LinkBike told the Malaysian Reserve newspaper that it has 250 bikes, 29 docking stations, around 3,000 rentals per month - and has had no bikes vandalised.

Meanwhile, The Economist is reporting that the founder of Ofo has been barred from staying in expensive hotels and from using first class travel.

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