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Chinese bicycle makers struggle as bike-sharing boom ends

Bikes of Bluegogo, a Chinese bike-sharing firm that went bankrupt in 2017, lie abandoned by the roadside in downtown Beijing on Nov. 30, 2017. [Photo/VCG]

Wangqingtuo town in north China's Tianjin city is a famous bike production center of the country. 

The website of the Wangqingtuo government says pedal power forms the town's pillar industry, accounting for one-seventh of the country's total output. 

In the past two years, China saw booming development of the bike-sharing industry, with most of the vehicles coming from Wangqingtuo. 

However, the bubble has burst and with several bike-sharing companies going out of business recently, bike makers have quickly felt the pinch. 

Until recently, the future had looked rosy for local bike makers, a landmark event being Tianjin Meibang Bicycle Industry Co., Ltd. receiving an order for 400,000 bikes from Bluegogo, a Tianjin-based bike-sharing company, in early 2017. 

At that time, many other bike producers in the town also gained large orders from various bike-sharing companies and plunged into full-scale production.

However, Bluegogo abruptly went bankrupt at the end of 2017 and only managed to pay for some 30,000 of the bikes it had ordered. Although part of Bluegogo's business was later acquired by Didi Chuxing, a Chinese ride-sharing company, Meibang was devastated by its failure to find alternative buyers for a huge stock of bikes worth millions of yuan. 

And Meibang was not alone. Many factories in Wangqingtuo town faced failure amid the bursting of the bike-sharing bubble. 

"[Some bike-sharing companies] are in arrears with their payments, and made bike makers unable to accept orders from old clients. This has made many bike makers very resentful of the bike-sharing service," said a manager of Keasdon (Tianjin) Bicycle Co., Ltd. 

The view was echoed by many other industry insiders. "The blow imposed by the bike-sharing services was not limited to delay or failure in payment," said a man named Wang working for Tianjin SITE Bicycle Co., Ltd. "In the past, there were some 20 million bikes used in China, but now, the bike-sharing industry alone was putting more than 20 million bikes on the streets. What can others do in such a market?"

Huo Xiaoyun, vice chair of China Bicycle Association, thought that the future of the industry lies in brand upgrading, suggesting makers focus on high-end models.

However, the manager of Keasdon was somewhat dubious, arguing that the key to brand upgrading was that the brand had to gain a certain market recognition. "A brand not familiar to customers can't attract anyone even if it goes high-end."

With the industry in a business downturn, it's less difficult for small and medium-sized makers, as they face lower costs from unused machines than large factories.

"The premises and working staff are wholly owned by us, so we can still made ends meet. For those who borrow from banks to sustain their operation, the days are too difficult," Keasdon's manager said.

Some bike makers are looking overseas for survival opportunities. A Ms. Gao of Aomei Bicycle Co., Ltd. said her company could still depend on overseas markets when domestic sales were disappointing. "We are trying to reach a deal with a Russian client. Overseas demand can sustain our business for a while," she said.

Another option is going online, but with the development of China's retail platforms, the cost for individual businesses has soared. "Some companies tried going online, but later discovered that the cost was too high," said Keasdon's manager. "We will come to a dead end if we fail in business transformation."

More people choose to give up. "Many workers left Wangqingtuo town to seek opportunities elsewhere. That's why so many factories here have stopped operation. Only small and medium-sized enterprises like us continue to struggle to survive," the manager said.