Daily Management Review

In their Hunt for Next Unicorn, China Tech Giants Bet on 'Uber For Bikes' Two-Wheel Drive


In their Hunt for Next Unicorn, China Tech Giants Bet on 'Uber For Bikes' Two-Wheel Drive
'Uber for bikes' is what China's tech industry is betting will be the country's next big internet craze and the tech giants are sloughing hundreds of millions of dollars into this.
The he humble bicycle is making a comeback which was a symbol of China's cities long before a boom in cars, snarling traffic and smog. As city-dwellers try to beat jams on China's most clogged streets, start-ups equipped with smartphone apps, GPS and scannable codes are selling cheap bike-sharing.
With Didi Chuxing's acquisition of Uber's China arm in August, creating a $35 billion giant, the rush to invest in car ride-hailing apps in China has peaked. And now big big money has been raised in the past month alone from bullish investors on the hunt for China's next tech 'unicorn’ by Shanghai's MoBike and Beijing-based ofo - both use customised Anglicised branding.
Re media quoted sources claiming that a $100 million funding round this month was closed by MoBike, backed by Chinese internet giant Tencent Holdings among others. Helped by investors including Didi, smartphone maker Xiaomi and U.S. hedge fund Coatue, which has backed Facebook and Google, Ofo raised $130 million this month.
"We did not expect there to be so many investors and we did not expect this field to get so hot," ofo co-founder Zhang Siding, 26, told Reuters in an interview. The firm now charging 1 yuan ($0.15) per hour to rent, was launched in 2015 by Zhang and four other Beijing students.

Even though tech sector watchers estimate neither of the companies yet made a profit and neither discloses earnings details, MoBike, also founded in 2015, and ofo say several hundred thousand residents of Chinese cities use the services every day. The question for the firms and their investors of whether the model could be replicated in other countries is raised as each claims to be the first of its kind in the world.
While MoBikes have orange-red inner wheels with fewer spokes and airless tyres to reduce maintenance; ofo's yellow bikes have a lower-tech, retro look and in a country estimated to have close to 400 million bicycles, the custom-made 'smart bikes' stand out.
A feature ofo and MoBike say is a major plus over traditional rental services, is the people hiring a bike can leave the bikes wherever their journey ends after riders use smartphone apps to unlock and pay the cost of hire. This is a major difference of the new rentals compared to traditional rental services where customers were required to return the bikes at a parking station. MoBike's app also allows users to see nearby vacant bikes using a GPS tracking system.
"I find it very convenient, because road traffic is so bad, especially during rush hour," said Yu Xiaoxia, 29, a teacher in the southern Chinese city of Guangzhou who pays 1 yuan per half-hour to use MoBike.
Some 85,000 of its bikes are providing 500,000 rides daily claims Ofo, which says it has more than 300 employees. Chief Executive Wang Xiaofeng od MoBike said his firm has more than 100,000 daily active users.
"We want to make bicycles sexy again by making a fashionable, high-tech bike," Wang, 43, told Reuters in an interview. Wang was previously the Shanghai head of Uber and is a MoBike co-founder.