Can bike-sharing in China turn a profit? Survivors Meituan, Ant-backed Hello try by raising fees

Chinese bike-sharing services that survived years of cutthroat price wars and a spectacular boom-bust cycle have decided to raise prices to try and turn a profit.

After losses amounting billions of yuan and the collapse of a slew of brands, including the fall of unicorn Ofo in 2019, the three biggest remaining firms – Meituan, Hello and Didi Chuxing – have curtailed expansion plans to focus on profitability.

Meituan’s bike rental service, formerly known as Mobike, will raise the price for a seven-day membership to 15 yuan (US$2.2) from 10 yuan. Memberships for 30 days and 90 days will be priced at 35 yuan and 90 yuan, up from 25 yuan and 60 yuan, respectively. The price hike was due to “increases in hardware, operations and maintenance costs”, Meituan said on its app. The new policy comes into effect at 11pm on Wednesday.

The membership plan allows users to ride any Meituan bike for the period without extra fees. Charges for one-off rides remain at 1.5 yuan per 30 minutes.

Ant Group-backed bike sharing firm Hello to scrap its US listing

Hello, the mobility firm backed by Ant Group, has lifted its per-ride price to 2 yuan for the first 30 minutes, from 1.5 yuan, in certain cities including Changsha, the capital of Hunan province, and Foshan and Zhuhai, both in Guangdong province, according to Chinese media Beijing Daily.

Ant is the fintech affiliate of Alibaba Group Holding, owner of the South China Morning Post.

The move followed an increase in Hello’s membership fees earlier this year. The one-month plan, for example, is now 35 yuan, also due to higher costs for hardware, operations and maintenance, the Beijing Daily report said.

However, it seems that old habits die hard as both bike rental operators are offering discounts for monthly memberships. For example, Meituan’s monthly membership now costs 14.8 yuan while Hello’s is 10.03 yuan.

Neither Meituan nor Hello immediately responded to a request for comment on Tuesday.

The bike-sharing industry has been hit by a shortage of raw materials, including steel, plastic and tires, which cost 10 per cent more in the first quarter compared with the same period a year ago, according to the China Bicycle Association.

In addition to supply chain challenges, the bike-sharing business still struggles to make ends meet after years of intense competition that relied on discounts to gain market share.

Meituan, Hello and Didi Chuxing account for a combined 95 per cent share of the market, according to research firm Insight & Info Consulting, but they all struggle to make a profit.

Hello, which scrapped a planned initial public offering in the United States last year, reported losses of 4.5 billion yuan and 3 billion yuan in 2020 and 2019, respectively. Meituan and Didi did not disclose financials for their bike rental businesses.

Didi has not announced any change to its bike rental rates. It offers the same rate as Meituan for a 30-minute ride.

“The endless low-price strategy or subsidies to take market share and squeeze others is outdated”, a commentary in state-run Beijing Business Today said on Tuesday. “It is a task for every bike-sharing company, sooner or later, to be self sustained”.

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