While the Chinese bike-sharing business has exploded in popularity over the last year, it’s still not clear if the industry’s incredible success is sustainable or profitable.
Case in point: Chongqing startup Wukong Bicycles. Despite being named after the immortal Monkey King of Journey to the West fame, Wukong is out of business after just six months, teaching other companies in the industry a valuable lesson: always put GPS on your bikes.
In only half a year, Wukong lost 90% of its bikes (presumed either missing or stolen). According to Caixin, by the time that founder Lou Houyi decided that GPS devices were necessary, the company had run out of money, becoming the first casualty of China’s shared bike boom.
To be fair, Wukong seemed destined to fail from the start, launching in the notoriously hilly city of Chongqing with 1,200 bikes. Lei said that while they began by charging users, eventually they were forced into a tactic commonly used by other bike-sharing companies of simply giving away bicycles rides for free to stay competitive. In the end, the company was 3 million yuan in the red.
“The startup is closed now,” Lei said. “I’ll think of it as a charity project.”
Of course, even having bikes with GPS installed and operating them in a flat city does not guarantee success for the dozen of bike-sharing startups that have sprung up around China. Users often leave bicycles parked out in the sidewalks or streets, so that they end up in a mass bicycle graveyard where they must be retrieved by paying off city authorities.
Meanwhile, major cities around the country are beginning to draft legislation to regulate the booming industry which is increasingly becoming dominated by two companies — Mobike and Ofo — vying to become the Didi Chuxing of shared bikes.
But the rewards still outweigh the risks for many. At around the same time that Wukong was closing shop, Mobike was securing $600 million more in funding.
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