Signs are emerging that China’s bike-sharing boom could be hitting road bumps.
For over a year, China’s city streets have been flooded with bicycles as dozens of startups vie to become the country’s “Uber for bikes.” For a while, local governments appeared powerless (or unwilling) to stop the mass of rubber and aluminum from blocking pedestrian walkways and piling up beside office complexes.
But now, some cities are saying “no more.”
On Aug. 18, Shanghai’s municipal transportation bureau sent a notice to a number of bike-sharing companies demanding they refrain from adding more new bikes (link in Chinese) on the streets. According to the bureau, the city has 1.5 million sharing bikes on its streets—about one for every 16 residents. The government also demanded that the companies aggressively relocate bikes parked and scattered carelessly across the city—the services let customers return bikes anywhere, rather than only in designated racks.
Neither Ofo nor Mobike—the biggest bike-sharing companies in China— responded in time to Quartz’s request for comments. But in an interview this week with China’s Hubei Television, Ofo said it was addressing the problem in Shanghai.
“This month Ofo has dispatched 80 extra carts [to relocate bikes], and we have a total of 2,500 operations staff working on cleanup and repairs,” said Hu Yun, chief of Ofo’s operations in Shanghai. “We are proactively cooperating with the government’s calls to clean up the city.”
Shanghai’s directive follows similar ones in other, smaller Chinese cities. On Aug. 5, authorities in Nanjing demanded no new bikes hit the streets. They also called for companies to obtain government licenses for each of their bikes, beginning next year. On Aug. 3, authorities in Guangzhou also called for bike companies to cease putting new bikes on the streets (link in Chinese), estimating that over 800,000 are in circulation. And on July 27, authorities in Zhengzhou, in the Henan province, demanded a similar suspension, pinning the number of bikes on the streets at 390,000.
Halting the distribution of new bikes comes around the same time as China’s national-level Ministry of Transportation published the first country-wide framework for regulating the chaotic industry. The actual rules were rather lenient—they stated that riders must register for services using their real names, that no company can offer rides to people under the age of 12, and that companies must provide insurance for riders. They also “encouraged” local governments to ensure adequate legal parking spaces for the bikes, and companies to offer rides without first requiring deposits (which usually cost between $15 and $30).
But the framework, coupled with a finger-wagging editorial published in the People’s Daily (a government mouthpiece), signaled that it would be up to local municipalities to regulate the businesses as they see fit.
That’s what appears to be happening now. Preventing the companies from adding new bikes on the streets is no small hindrance for the industry’s core business model. Generating revenue depends on getting rides, and getting rides depends on making sure bikes are nearby. One way to ensure that a potential rider always has a bike nearby is to put dozens of bikes on every street corner—but that has led to chaos and oversupply. Capping the number of bikes on the road will help put the brakes on a startup battle that’s spinning out of control.