Singapore

COMPETITION is hotting up among bike-sharing companies in Singapore - in a manner reminiscent of the extravagant war among ride-sharing apps here in their heyday, and prompting fresh concerns about the sustainability of the sharing economy.

Bike-sharing, a scheme popularised in China in the last few years, makes available bikes for shared use to individuals on a very short-term basis. It allows them to borrow a bike from point A and return it at point B, usually without the use of a docking station and at an affordable rate.

In Singapore, there are tens of thousands of such bikes collectively - offered by three operators: oBike (whose fleet size is in the "tens of thousands"), ofo ("over 10,000"), and Mobike ("in the thousands"), The Business Times has learnt.

On Thursday, Beijing-based ofo announced that it had raised over US$700 million in Series E funding led by Alibaba Group, Hony Capital and Citic Private Equity. This is said to be the largest sum raised in the bike-sharing industry to-date, fuelling an already costly war.

Current investors Didi Chuxing and DST Global also participated in ofo's latest round. Didi, a major ride-sharing player in China backed by Alibaba and Temasek Holdings, reiterated that both Didi and ofo "hold common values" and "benefit from the sharing economy".

Ofo said that by end-2017, it plans to deploy a total of 20 million bikes to the bike-sharing ecosystem and grow its service to 200 cities in 20 countries. It now serves Singapore, China, the US and UK, and has snagged nearly US$1.3 billion in funding since its 2014 founding.

Asked about its plans for Singapore, an ofo spokeswoman said that it would add over 1,000 bikes across 28 public housing estates and over 100 preferred parking zones by end-2017. It will also introduce a new fleet of bikes to One-North and Tuas, with support from JTC Corporation.

On Thursday too, Mobike announced an exclusive partnership with Mastercard that will see the latter integrate its digital payment service, Masterpass, into Mobike's app. This allows local riders to sync their Mobike accounts with Masterpass for easier, secure in-app payments.

To mark its 100th day milestone in Singapore, Mobike will offer free rides till July 31, and introduce a fleet of newly-designed bikes that are tailored for Singapore's roads. These new bikes will feature three gears, adjustable seats and solar-powered headlights.

Singapore is Mobike's first market outside of China. Since 2015, the Chinese company has raised a massive US$925 million in venture capital, and counts Temasek and Tencent among its investors. Its service areas include China, Singapore, the UK and soon, Japan.

Meanwhile, Singapore-based operator oBike was unperturbed by ofo and Mobike's latest developments, citing deep local knowledge as a competitive advantage over its rivals here. Just in May, oBike unveiled 1,000 new bikes that boast lighter frames and sturdier steel fenders.

OBike general manager Elgin Ee told BT: "We are well-entrenched in the local community and equipped with deep knowledge that comes from being the only homegrown bike-sharing company in Singapore. (These are) instrumental in the development of our local business strategies and executions, and have enabled us to be uniquely different from our competitors."

OBike was launched in Singapore in April, making it the latest entrant to the bike-sharing sector here. It also operates in Malaysia and Taiwan, and has plans to expand across South-east Asia. It would not disclose any funding or financial information.

Observers on Thursday labelled bike-sharing a profit-challenged sector, as companies incur high costs (from the purchase and maintenance of bikes) but offer services at relatively low rates (about S$1 for every half hour of use). It is much like the rest of the sharing economy, they said, where firms are unprofitable and burning venture capital money to acquire users and market share.

Singapore-based ride-sharing app Grab, for instance, is not profitable as a company, although it is profitable "in some markets", according to its co-founder Anthony Tan. Uber, a closely-held company based in San Francisco, reportedly chalked up a first-quarter loss of US$708 million.

Isaac Ho, chief of private investment group Venturecraft, said: "While the sharing economy is great for consumers, it is not for the companies, even if they are backed by venture capital. The recouping of capital from charging fares to users alone is questionable."

Mr Ho, however, noted that collecting deposits from first-time users - a practice among many bike-sharing companies (but not ride-sharing companies) - form a good revenue model. "The deposits collected are an additional source of capital to generate revenue elsewhere. The tendency for users to cancel the app and retrieve their deposits is also low."

Mao Daqing, founder of co-working space UrWork, told BT that despite viability issues, the sharing economy is developing at an exponential rate. Total market value will reach US$335 billion by 2025, going by a Credit Suisse report, he said.

"It will gain traction due to the increasing mobility of the urban population. And from the current growth trajectory, China's sharing economy will crown the world within the next three to five years."