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Economy

China cracks down on bike-sharing in 8 cities

Two-wheelers pile up on streets after explosive growth in providers

Surplus bikes have piled up in the city of Guangzhou.

GUANGZHOU -- The rampant spread of bicycle sharing in China since late last year has left the service plagued by problems, prompting authorities to restrict the business in at least eight cities nationwide.

About 10 startups offer bike sharing in Guangzhou, driving competition. This large southern Chinese city has more than 800,000 bicycles available for sharing, with over 7.5 million registered members. But the many vehicles not in use have piled up on the streets, leading Guangzhou's authorities on Aug. 3 to ban the addition of new shared bikes in the city.

Nanjing's market already has 450,000 bikes, and local authorities issued a ban on new shared bicycles there the same day, citing disorderly deployment. Similarly, Shanghai has restricted the supply in the central part of the city. Authorities also have partial or full bans on additional bike deployment in municipalities including Hangzhou, Fuzhou, Lanzhou and Zhengzhou.

An 11-year-old boy died in a traffic accident in Shanghai during the spring after he broke the lock on a bike and took a ride, prompting some to fault the service operator. Some people tamper with bikes to use them for free, while others keep such bikes at home despite not owning them.

China's Transport Ministry responded to the overheating market with an Aug. 1 directive outlining eight points for improving the bike-sharing business and urging operators to strengthen fleet management. The directive also demands that operators ensure registrants use their real names and bans use of the bikes by children younger than 12.

Bike sharing in China is paid for easily by smartphone, and the fee is only about 0.5 yuan for 30 minutes. The bikes can be dropped off anywhere convenient for the user. The few barriers to market entry have spawned an explosion of providers since last fall.

Changzhou Youon Public Bicycle System is set to become the first listed Chinese bike-sharing company. It is in the midst of allocating shares for a 644.4 million yuan ($96.5 million) offering on the Shanghai Stock Exchange. The company has operations in 210 cities and counties, and state media reports say it has received investment from Ant Financial Services Group, an affiliate of Alibaba Group Holding. The company posted a net profit of 26.9 million yuan on revenue of 193 million yuan in the first quarter.

China reportedly has 106 million users of bike-sharing services. Yet a glut has led three companies to go bankrupt in the past three months, while inconsiderate use has become a social issue. Authorities may need to work with service providers to gauge the growth potential of the business.

The sharing economy in China roughly doubled in 2016 and is expected to keep growing at an annual clip of 40%. The government hopes the sector will help restructure industry by alleviating the reliance on manufacturing.

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