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Wheels stop turning in cycle-making hub
en.hangzhou.com.cn   2019-08-22 13:31   Source:China Daily

Factories not taking orders as bike-sharing industry declines

Countless abandoned bicycles lie piled in a field in Wangqingtuo, a town on the western outskirts of Tianjin that once promoted itself as "China's first bike town".

Just a few years ago, Wangqingtuo's cycle factories were booming as streams of orders flooded in from the rapidly growing bike-sharing sector.

However, many of them no longer take orders as they fear that with the decline of the bike-sharing industry, they will not be paid. Some have even closed for good.

While the roller coaster experience of these factories can be closely linked to the rise and fall of the bike-sharing business, it also reflects a pressing need to upgrade the traditional bicycle industry.

Wangqingtuo now resembles a bicycle graveyard. A swath of land near the town center is littered with rows of dusty cycles piled in hectic heaps. They are rusting away, with handlebars lodged haphazardly between spokes, and covered in weeds.

A 65-year-old villager passing by the scene said: "This is just a small proportion left after a cleanup. Before, the abandoned bikes were scattered all over the nearby fields. These bikes will probably also be cleared away next. It's such a waste."

Shared bikes of different brands, painted in company colors like blue, green, yellow and orange, were abandoned after the government tried to curb their numbers in cities and investors became reluctant to provide any more venture capital about a year ago.

In late 2016, bike sharing swept the country, enjoying "explosive growth" the following year, according to a report released in March last year by the China Academy of Information and Communications Technology.

The report said the number of shared bikes and users surged to 23 million and 221 million in 2017 respectively from 2 million and 18.9 million in 2016, with both registering an "unprecedented" growth rate of more than 1,000 percent.

The bikes, which were first used by students on university and college campuses, are dockless and can be unlocked anytime, anywhere simply by scanning a QR code with a smartphone.

When they first emerged, they were warmly welcomed by the public because they reduced the need to walk and eased traffic flow.

According to a survey of shared-bike users nationwide, the total use of private cars, car-hailing services and taxis fell by 55 percent by the end of 2017, effectively reducing road congestion.

That was when Wangqingtuo was at its height.

"Wangqingtuo has been famous for producing bicycles and e-bikes at low cost since the very early years," said a 35-year-old woman surnamed Dong, who has run an e-bike shop in Wangqingtuo for seven years.

"It was busiest here in 2016 and 2017. Both sides of the street were occupied by either big or small bike manufacturers," she added.

A member of staff, surnamed Huang, at the Wangqingtuo assembly factory of the Shanghai Phoenix Bicycle Company, said they had taken orders for only a few hundred bikes in recent years. "There were too many orders from the shared-bike companies for our small factory to handle," she said.

Eyeing the opportunities, more bike-sharing startups entered the market and scrambled for a share by putting more bikes on the roads and charging users only a small amount for an hour's ride. Many did not ask for deposits for rides.

As orders kept flooding in, many manufacturers saw it as their best opportunity to make a profit. Some abandoned their original business and turned solely to shared bikes, putting the money they made into increasing inventory to prepare for the "insatiable demand" they expected, Huang said.

Then came the collapse. The cutthroat competition began to eliminate players with poorer finances. In June 2017, Wukong Bicycle closed when its funding sources dried up, followed by Nanjing Dingding Bicycle in July that year.

In August 2017, Xiaoming Bicycle was unable to refund all deposits to users, and the following month Kuqi Bicycle announced that it would be acquired by a company in Sichuan province, but did not disclose further information.

In November 2017, Bluegogo, China's third-largest bike sharer, went bankrupt. Its founder Li Gang said in an open letter that its bikes and services were "feeble" in the absence of capital support and promised to raise funds.

Moreover, the random "parking" of a large number of bikes clogged the roads in cities, and the companies' failure to operate proper maintenance and management exacerbated the challenge to public governance.

Since mid-2017, many cities, such as Shanghai, Hangzhou in Zhejiang province, Fuzhou in Fujian province, and Guangzhou in Guangdong province, have issued successively stricter restrictions on additional shared bikes. Moreover, stricter environmental policies related to manufacturing also imposed a heavier cost on many factories in Wangqingtuo, the majority of which are small, family-run businesses.

Dong, who runs the e-bike shop, said: "Since last year, many factories have shut down. Retailers also disappeared."

The owner of the Shengyou Bicycle Factory, who requested anonymity, said: "Shared bikes? We hate them. No manufacturer in town has accepted orders for them since last year. We were severely battered by such business. Those companies just vanished without even asking for the bikes, hence those abandoned on the farmland."

Tianjin is an important bike-making hub, home to nearly half China's entire output. Wangqingtuo, benefiting from the city's rich resources, earned its reputation for its small workshop-style operations and low production costs.

The town started in the cycle business in 1994, when some workers with experience of assembling bikes set up small workshops. The profits soon attracted competitors, who moved in and established "China's first bike town".

The 1990s were a time when a bicycle was needed in each household for commuting to work.

"Bicycles were part of the scenery in China at that time. All workers rode bikes to work. There were no cars in sight at all," said 77-year-old Yang Maoxiu, CEO of Golden Wheel Group, one of China's biggest bike exporters, which is based in Wuqing district, Tianjin.

However, bikes today are more than just a means of transportation.

Liu Xuequan, chairman of the Tianjin Bicycle Industry Association, said: "We have cars, buses, subways and all kinds of different modes of travel, so the bicycle's function has shifted from simply commuting, to leisure, fitness and much more. Therefore, the materials, technologies and the entire manufacturing system are undergoing a transformation."

Many people believe the birth of the shared bike provided the industry with a "second spring". It involves technology - unlocking the bike and being able to trace the kilometers ridden all through an app.

"That's the good side of shared bikes. In some ways, it pushed the technological advance of the industry and led to bikes being safer and more durable," Liu said.

"But they arrived too quickly for small factories to react and get prepared. They didn't differentiate their products or find their position amid the fierce competition," he added.

The bike-sharing industry is restructuring. In Wangqingtuo and many other places in Tianjin, the prospects for not only small factories and manufacturers appear bleak; many bike stores and outlets have closed as there is little need to own a bicycle when shared ones are widely available.

Dong said her e-bike store is now visited by fewer customers, despite cheap prices.

Huang, from the Shanghai Phoenix Bicycle Assembly Factory, said only a few big names such as Mobike and Ofo are left in the market, and the small factories in Wangqingtuo cannot meet their demands.

Yang said: "Operators need progress and so do products. When management, capital and the level of technology cannot keep up with progress, then operators are doomed.

"Enterprises will become more intensive because small ones won't be able to cope with society's needs. Strengths in technology, capital and personnel all need to reach a scale, and if you can't make it, you will be eliminated," Yang said.

Unlike the bleak situation in Wangqingtuo, Yang's assembly lines are busy and he is still taking some Mobike orders.

He started his cycle business in 1987 and is a pioneer in producing some of China's earliest high-end mountain bikes. He also added a range of colored frames, when most were black.

Yang said he still has strong confidence in the industry, but in the future bikes should be high-end, intelligent and beneficial to people's health.

"People still need bikes, whether as a means of transport, a way of exercise or a personal hobby. This is a product that people like and is always in need of development. As humans and society progress, this product also needs to bring into play its social benefits and effects," he said.

"High-end, intelligent bicycles designed to focus on the mechanics of body movements, such as meeting coordinated efforts of muscles and the nervous system to maintain balance and posture, are where the industry is heading now, both at home and abroad." he added.

Author:By Zhang Yangfei in Tianjin  Editor:Wang Yueyun
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