China Is Burying Its Cities Under Mountains of Extremely Cheap Bikes

My commute to work in Beijing used to be a 50-minute ordeal of urban combat. I’d board a rush-hour subway car—and by “board,” I mean forcefully wedge myself into a mass of humanity so tightly packed that I couldn’t bend an arm to glance at my phone. A few months ago, a new, semi-ironic indignity began to add even more time to the slog: the need, outside each station, to navigate past sprawling regiments of rentable bicycles, numbering in the dozens or even hundreds, clogging walkways and tripping up pedestrians. The bikes are the seemingly ever-expanding inventory of two Beijing startups, Mobike and Ofo, and several copycats. The services have become almost identical—scan a QR code to unlock a bike, then drop it off anywhere, no docking station needed—so the only thing they can compete on is convenience.

According to state media, more than 3 million two-­wheelers are now deployed across Chinese cities, with by far the heaviest supply in Beijing and Shanghai, in busy commercial areas and narrow hutongs alike. Venture funding in the capital is a lot like commuting: crowded and seemingly out of control. Startups are constrained neither by money nor plausible business plans—they proliferate and often disappear in a Darwinian cycle. “The Chinese internet scene is brutal and competitive. It’s sometimes compared to a fight to death, like the gladiators,” says Kai-Fu Lee, a well-known venture capitalist based in Beijing and founder of Sinovation Ventures, which backs Mobike. Competition has caused the cost per ride to drop to as little as 1 yuan, or 15¢. In theory, one of the startups will outlast the others and then be able to increase prices, as the ride-hailing company Didi Chuxing did after besting Uber Technologies Inc. in China. (Lee also notes the bikes have GPS trackers that provide valuable data on consumer habits, and the startups’ apps display ads from the likes of Nike Inc.) For now, the Chinese venture market seems buoyant enough that Mobike, Ofo, and the others can continue to flood streets with more bikes every week. Across all industries, 13 Chinese startups have reached unicorn ($1 billion) funding status since the start of the year.