SHANGHAI -- A fast-growing Chinese bicycle-sharing startup looks to debut in Japan next month, with plans to operate in roughly 10 major cities by the end of the year in cooperation with local governments.
Mobike launched its service just last year in Shanghai, and the company now commands 5 million bicycles across China. The secret of its meteoric success lies in the use of smartphones.
The bicycles are equipped with a GPS system, letting users find a nearby bike via a smartphone app. Customers also use the app to unlock the bike by scanning its QR barcode as well as pay for the service.
Singapore and the U.K. have opened their doors to Mobike, recognizing the potential to reduce traffic congestion and automobile exhaust emissions as well as improve the health of residents. Japan will be the third overseas market to embrace the high-tech service.
Tailor to local needs
Mobike's new Japanese unit intends to offer its service in cooperation with local governments.
In many Japanese cities, commuters ride a bicycle to the nearest train station and leave the bike on the street during the day. The sea of bicycles clogging the streets around the stations is a problem many localities have long struggled to solve.
Municipalities typically will build bicycle parking stations, but these offer only limited relief. With land scarce or too expensive near busy train stations, those parking stations are normally at inconvenient locations. Thus, many commuters continue to leave their bicycles on the streets in their rush to catch the train.
A selling point of Mobike's service in China is that users can drop off the bike anywhere, but the company's service in Japan likely will designate pickup and drop-off locations, such as municipal bike-parking facilities and parking space at convenience stores, restaurants and other partners. As a bicycle's GPS system allows tracking of its location, Mobike may devise a mechanism to warn users who leave a bike in an undesignated location.
Mobike is in final negotiations with some local governments -- Tokyo and the Osaka area are among those targeted -- and a test mode for the service likely will charge 100 yen (90 cents) or less for 30 minutes of use.
Trickles turn into a torrent
Mobile phones allow such a low-fee service to be profitable. Many Chinese internet startups feed off the widespread adoption of mobile payment services that are simple for consumers to use with small-amount purchases.
Tencent Holdings' WeChat Pay and Alibaba Group Holding's Alipay have become part of everyday life for millions of Chinese people. A report by a local research firm suggests that the Chinese mobile payment service market handled roughly 200 trillion yen worth of fund transfers in 2016.
Startups such as Didi Chuxing, a Chinese car ride-share service, and home-sharing service provider Tujia owe much of their success to mobile payment services. Mobike charges just 1 yuan (15 cents) for 30 minutes of bicycle use, but the company rakes in massive amounts daily, since mobile payments let the startup receive 20 million payments per day without breaking a sweat.
Ready to roll
Easy access to funding also contributes to the rapid growth of new businesses and services in China.
Mobike said Friday that it will raise more than $600 million from a consortium including Tencent. Chinese startups are said to have attracted investment worth around 3 trillion yen in 2016, more than 20 times the amount for Japanese startups.
Recent years have seen Japanese convenience stores begin accepting Alipay, along with Tujia forming a Japanese subsidiary. But these moves have focused on demand from Chinese tourists. Mobike represents a first wave of Chinese net startups squarely targeting Japanese consumers.