Sharing apps shake up Chinese bike manufacturers

A worker adjusts the parts of an ofo bicycle in a production plant of Flying Pigeon Cycle Development Co Ltd in Tianjin. The bicycle manufacturer has entered a partnership with the bike-sharing startup. [Photo/Xinhua]

TIANJIN - The booming bike-sharing industry has had a polarizing effect on Chinese bicycle manufacturers, with big companies going full steam to churn out millions of bikes every month, and smaller firms dying due to a lack of orders.

At factories of Flying Pigeon, a bike maker in Tianjin, production lines are going full throttle.

"The company started to hire more workers at the end of last year. We have added at least 100 workers and are hiring more," said Zhang Jinying, Flying Pigeon's general manager. The company is a supplier for Ofo, one of the biggest bike-sharing services, whose two-wheelers are commonly known as "the yellow bikes" among Chinese city dwellers.

There are 29 different bike-sharing providers in China. Riders spend as little as 1 yuan ($0.15) per hour after unlocking bicycles with a mobile app, and they can drop them off anywhere for the next user. Mobike, Bluegogo and Ofo are among the major competitors.

Flying Pigeon is scheduled to produce 900,000 bikes in March, with half of the orders from bike-sharing start-ups, Zhang said.

"There have been so many more orders since January this year. Many of us have to work overtime," said an employee who gave his name as Chen.

Fushida, another supplier for Ofo, is also busy dealing with spiking orders.

"Ofo ordered about 800,000 bikes for April. In total, we plan to make a million bikes in April," said Liu Jie, general manager of Fushida.

"This year is definitely the peak of production for shared bikes. I expect output will drop next year when there are enough bikes," said Liu Xuequan, director of the bicycle industry association in Tianjin, China's largest bicycle manufacturing base.

But there is also great room for development for the bike-making industry, said Liu.

A bicycle's service life is around two years if five users ride it each day.

"There are at least 10 million bikes that need repairs or replacement every year," said Liu.

According to a report from Beijing-based BigData Research, by the end of 2016, there were 18.86 million users of shared bicycles, and the number is expected to expand to 50 million by the end of this year.

The fast growth of bike sharing has dealt a blow to the traditional bike market, said Liu.

"There is a wax and wane effect. The bike-sharing business is getting bigger, but the traditional bike sellers are faced with great difficulty," Zhang said.

"When a person can ride a bike without having to worry about where to park it, or whether it will be stolen, there is little desire to own a bike of one's own," Zhang said.h In the bike-making industry as a whole, there is certain overcapacity, Liu said.

"The big companies are doing reasonably well at this stage, but the smaller ones are definitely suffering," he said.

Dozens of small and medium bike-makers have quite a few orders, Liu said.

According to the Tianjin Municipal Bicycle Industry Association, Tianjin has produced over two million bikes in the first two months this year. At least 10 million bikes will be produced by the end of this year.