Manchester warms to bike hire service's advanced technology and convenience

Residents of the northern English city of Manchester can now hire bikes like their counterparts in London - but without any cost to the taxpayer. The city's hire program was started last month by China's Mobike, which promises to revolutionize the bike-sharing industry.

Mobike is backed by Chinese internet giant Tencent Holdings Ltd and has raised more than $600 million to invest in its expansion. It operates differently from the London bike-sharing program, which is largely funded by public bodies such as Transport for London.

In June, Mobike rolled out an initial 1,000 bikes to test the market in Manchester for six months. Steve Pyer, general manager at Mobike UK, says its method of operation means it is far cheaper than other bike-sharing options.

"Mobike's unique advantage is its ability to drive down costs through large-scale manufacturing and eliminating the process of installing docking stations," he says.

"Mobike's capacity to manufacture 100,000 bikes a day creates big economy of scale. Meanwhile, because our bikes are not chained to docking stations, we cut all the costs related to docking station installation."

Mobike's bicycles, in the company's signature silver and orange, are manufactured in Wuxi in China. They are assembled and then shipped to the UK.

Borrowers first need to download Mobike's mobile app and pay a deposit of ￡49 ($63; 55 euros) - or ￡29 in July. Riders unlock bikes by using the handlebar scanner to scan a QR code generated by the app.

Following Mobike's launch in Manchester, Pyer's team will launch 750 bikes in the west London borough of Ealing, just outside the zone covered by London's publicly-funded bike program, later this year. Mobike received approval from Ealing council on July 12, the same day as the Singapore bike rental company Obike launched 500 bikes in the east London borough of Tower Hamlets.

Pyer hopes that Mobike's integrated business model will help it prevail in what is likely to be intense competition; the Chinese company manufactures the bikes, provides the funds and manages the program.

"The Mobike model has cost saving advantages, and synergy can be achieved by operating the whole supply chain. For example, data we gather from the use of our bikes on the road can feed back into the manufacturing process to make sure our bikes can better serve customers," says Pyer.

The Mobike system offers riders more flexibility. In London, bikes are picked up and returned to fixed docking stations, so at times riders may arrive at a docking station and find there are no spaces. In Manchester, Mobike users can return their bikes to bike parking areas rather than docking stations. Mobike employees will then redistribute the bikes to where they are most needed.

Mobike, founded in Beijing in 2015, launched its first bike-sharing program in Shanghai in 2016 and has since rolled out programs in China and Singapore. It now operates 5 million bikes and Manchester is the 100th city to host the service.

In the company's first year of operation, Mobike users cycled over 2.5 billion kilometers, equivalent to a reduction in CO2 emissions of more than 610,000 metric tons, based on calculations by WWF China. In June 2017, Mobike received the WWF's "Climate Solver Sustainable Urban Mobility Special Award" in recognition of the impact of its innovative technology and promotion of sustainable transportation.

Mobike's Manchester program is the company's first in Europe. Pyer says it chose the city because it already has strong links with China.

China's Beijing Construction and Engineering Group is a construction partner in the ￡800 million Manchester Airport City project, which seeks to create a commercial and retail development around the airport. Meanwhile, China's Hainan Airlines is currently running flights between Beijing and Manchester.

"China and Manchester have extensive trade relations and in recent years the Chinese student population in Manchester has been steadily growing, so Manchester is a good place for us to test out our international expansion plans," says Pyer.

Most of Mobike's funding comes from venture capital investors who believe in the company's growth potential. Mobike completed its latest fundraising round in June this year, which took its cumulative investment received to a figure of $600 million. This achievement broke records for the highest amount of funds ever raised by a bike-sharing company.

Its investors include US investment companies TPG and Farallon Capital Management and China's private equity firm Sequoia Capital and ICBC International Securities, the securities arm of the Chinese State-owned bank ICBC.

"Mobike is not just a bike manufacturer, it is a visionary IT-focused company," says Pyer. Behind the Mobike program is the eye-catching concept of the internet of things, which seeks to use cloud computing technology solutions to better manage bike distribution. Each bike is connected to a central IT system, which uses GPS to track its whereabouts.

Underlying Mobike's tech-heavy focus is a mature international supply chain, which includes SIM cards from Vodafone and cloud posting services from Microsoft, which allow bike data to be shared and analyzed.

Mobike's technology is also able to detect other information useful for users, such as potential road closure information, which can help users better plan their journeys.

Pyer, who previously held a senior position at Serco, the company operating the London Cycle Hire Program, was impressed by Mobike's aggressive international expansion plans, as well as its technology and efficiency.

"What I learned over the years is that there are many things you can plan for in advance, but when it comes to actually implementing the plans, there are always unexpected challenges that impact on bike hiring habits, such as weather conditions, public events or road closures.

"It's important to always remain alert on finding flexible solutions to address challenges, and hence improve cyclists' experiences. These are important lessons I look forward to bringing to my job at Mobike," says Pyer.

Despite his optimism, it is not clear how Mobike hopes to make a profit. It charges 50 pence for each half-hour journey, compared with ￡2 in London.

Pyer says that because Mobike is new to the UK market, it is not looking to make a profit in the first year.

"All we are concerned about right now is to launch the brand properly and make sure Manchester's residents are happy to use our bikes," Pyer says.

Within a week of Mobike's Manchester launch, it had already been praised by the British media. The Guardian's north of England editor Helen Pidd says she is hooked.

"Mobikes are significantly better than London's hire bikes, or any I've tried in other cities across the world," Pidd wrote in The Guardian.

Mobike's model of charging cyclists minimum fees, the fact it does not require public funding and the ability to leave bikes anywhere are obvious bonuses, in Pidd's view. She adds that the bikes are also fun to ride: "they're much nippier than the London tanks, and lighter too. The jury is out on whether they really are indestructible, as the designers claim."

Rhys Whalley, executive director of the Manchester China Forum, says the Mobike trial in Manchester is an "excellent example of the potential for China's rapid innovation and smartcity solutions to be applied in overseas markets".

Whalley also praises Mobike's desire to work with partners in Manchester to make sure its unique business model fits the city's characteristics.

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