Bike-sharing craze punctures future of China’s cycle hub
China’s capacity for shared bike production has already reached 30 million, while China made 25 million bikes for the domestic market annually before the boom of bike sharing, industry figures show.
Bike-sharing firms began taking off around China early last year, offering internet-connected users a convenient and cheap form of transport around China’s clogged cities with just the swipe of a phone. Backed by more than USD 1 billion in combined financing, 70-plus bike-sharing companies entered the rapidly expanding market.
iiMedia Research, a Guangzhou-based consulting firm, estimated that China’s shared-bike market would expand by 736 per cent to RMB 10.28 billion (USD 1.58 billion) this year, and the number of users rise 646 per cent to 200 million.
To meet the demand, bike-share firms placed big orders with traditional manufacturers to supply the millions of bikes they needed. Producers responded quickly and increased capacity sharply, leaving others behind.
Felix Tran, an equity strategist with Bank of America Merrill Lynch, said this could be a turning point for those that could not keep up.
“The sharing economy will eventually disrupt most sectors,” Tran said. “An increasing number of companies will potentially fall victim to the creative destruction of a ‘Kodak moment’,” he said, referring to the US photographic film giant’s failure to adapt to digital photography.
A small number of makers were chosen by bike-sharing platform companies last year to be original equipment manufacturers. After ramping up capacity to fill orders for the sharing platforms, many plants had to stop some production lines or suspend operations altogether, a Tianjin official said.
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