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China's bike-sharing frenzy has turned into a bubble


China's bike-sharing companies have hit a roadblock.


The industry boasted close to 60 startups as recently as 18 months ago, according to Yu Xue, an internet research analyst at IDC China. He predicts fewer than 10 will survive the next year.
The companies allow customers to unlock a bicycle using only a smartphone, ride it around town, and then leave it at their destination. The model works, but the industry has grown too big too fast.

根据咨询公司 IDC中国 互联网分析师薛雨介绍,18个月前共享单车行业还曾经号称有将近60家新兴企业。他预测估计仅有不到十家企业能熬过18年。所谓共享单车就是顾客可以仅用手机就打开自行车,然后在城市里骑行,最后把车子停靠在目的地。这种模式的确有效,但是这个行业发展的过于大过于快了。

The proof is scattered across China's urban sidewalks, where piles of underused bikes have been dumped. Complaints have even prompted authorities to limit the number of bikes in some cities.


A cull is now underway, with several firms already having gone out of business. Others have been forced to merge as funding becomes scarce.
Xue said it's difficult to track the scale of the damage, because many of the startups close their doors quietly and without much warning.
"The growth rate of bike-sharing users is slowing down," said Zha Songcheng, vice president of Hellobike, which claims to be the third largest bike sharing company in China.


Money has also largely dried up. Bluegogo, which claimed at its peak to have 20 million users and over 600,000 bikes, cited a lack of funding as one of the main reasons it handed over operations to a rival firm in November.


As companies fold, some customers have reported trouble getting their rental deposits back. 


Last week, Mingbike became the first Chinese bike-sharing firm to be sued over its failure to refund deposits, according to local media.


China's Ministry of Transport announced last month that it would clamp down on the sector to "protect customers' interests and put the industry in a healthy and orderly track."


Two firms have a major advantage over the rest: Mobike is backed by tech giant Tencent, and Ofo has e-commerce heavyweight Alibaba in its corner.


They control a combined 90% of the market, according to Xue. Both are valued at more than $1 billion, giving them war chests that smaller firms just don't have.


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