China's 'Walmart of transportation' is facing administrative barriers in the bike-sharing industry.
While major agglomerations are swelling up and the first mile/last mile (FM/LM) problem is getting serious in China, Didi Chuxing is making attempts to diversify its urban service menu. Bike-sharing seems to be next on the list. One year after starting an aggressive campaign by dragging ofo (小黄车) and bluegogo (小蓝车) bikes to its omnipresent platform, the firm shifted focus and is now developing its own brand.
36Kr reported on Wednesday that the company is about to bring 3,000 brand new qingju bicycles (青桔单车) to Zhongguancun Software Park, Beijing in order to replace a batch of bluegogo bikes that were previously allocated there. According to reports, thousands of old bluegogo models in Beijing are hugely damaged, hence, this renovation looks quite natural
It is worth mentioning that the new qingju model is close to bluegogo prototype in terms of net cost, according to an employee of Tianjin Fujida Bicycle Factory that is broadly cooperating with Didi. The company thereby won't take extra losses and will even benefit from this change due to the economy of scale. The China Business Journal (中国经营报) previously reported that the factory and Didi concluded a contract on producing 150,000 qingju bicycles. By the beginning of August 2018, one-third of this amount had been manufactured and eventually moved to warehouses in Beijing.
Later on Thursday, the Municipal Commission of Transport (北京交通委员会) published an article on Weibo, pointing out that Didi violated relevant provisions of Beijing municipal regulations on non-motorized vehicles and, by doing that, seriously disrupted the order of Internet bicycle rental operation in the city.
Didi promised to remove the new batch from Zhongguancun by 6:00 on May 16. However, according to the results of an inspection conducted by the Haidian traffic department, some of the qingju bikes still could be found within the nearby territory. As the company stated, it will continue negotiating with local authorities to get permission for replacing the obsolete models.
Since the second half of 2017, the local government has been tightening industry regulation, it set 1.91 million as the maximum amount of bicycles on the streets of Beijing. According to the latest data from the Beijing Transport Commission, there are nine registered Internet bicycle rental enterprises operating in the municipality. The average monthly sharing bicycle usage rate in April didn't reach 50%.
Didi's intervention to the bike-sharing segment was, in many respects, a response to the acquisition of Mobike (摩拜单车) undertaken by Meituan-Dianping group (美团点评). Now, debuting in China's capital with its self-developed brand, Didi is making a bold step to become the main pretender to the urban transportation throne in the country. However, it is now exposed to various challenges including regulatory restrictions.