Riding high in the UK

Ofo bikes are becoming a more familiar sight in British cities as the sharing company continues to expand its presence

When the Chinese company ofo set up a bike-sharing program with 50 bicycles in Cambridge in April, the yellow bikes hardly attracted much attention.

Fast forward half a year, and ofo now operates around 2,000 bikes across half a dozen cities in the United Kingdom, including Cambridge, Oxford, Norwich and some London boroughs, and is fast expanding.

"The UK is a big focus market for us, as London is a megacity in Europe and bike hiring is becoming a trend in the UK. And London has challenges such as congestion and poor air quality, which we can help with," says Joseph Seal-Driver, operations director of ofo UK.

Ofo, so named because the letters resemble a bicycle, has been called the Uber for bikes. It may be a startup, but it has big dreams.

"Our goal is to get the world cycling and improve the health of our customers. We want to cover all corners of the world with our bikes," says Seal-Driver, who was previously CEO of the car-sharing company Drive-Now.

Seal-Driver, who joined ofo in May, was actually ofo's third hire in the UK, and he believes he made the right choice, since he believes in ofo's future.

"I am very excited by ofo's growth curve and I think it's a great brand, so I swapped four wheels for two," he says.

Ofo was founded in 2014 on the grounds of Beijing's Peking University as a student project. It now operates in 180 cities in 17 countries. Its goal is to operate in 200 cities in 20 countries by the end of the year. As of 2017, the company is valued at $3 billion (2.54 billion euros; ￡2.28 billion) and has more than 62.7 million active users each month.

Despite its strategy, ofo faces strong competition in the domestic and international markets. One strong competitor is Mobike, which operates a stationless bike system just like ofo. In its latest round of fundraising in June, Mobike raised $600 million, which brought the company's value to an estimated $3 billion. According to Mobike, its bikes are used 30 million times in 180 cities every day.

Central to ofo's business model is the generation of high revenue through high use, even though the cost per ride is small. In the UK, the company charges 50 pence (66 cents; 0.57 euro) for a half-hour ride and??5 for 24 hours.

To encourage more use, the company moves bikes to locations convenient for users. It also encourages users to leave their bikes at popular destinations by awarding extra points for doing so.

Both companies are backed by big investors. Mobike is backed by Tencent, one of China's technology giants, and ofo is backed by Alibaba. Other investors in ofo include Xiaomi and ride-sharing company Didi Chuxing.

The competition is so strong between the two that media reports have speculated that ofo and Mobike are in talks about a potential merger.

Mobike and ofo are also in competition beyond China. In the UK, Mobike has launched programs in Manchester, west London, Oxford and Newcastle, while ofo has brought bikes to east London.

Seal-Driver says his team decided to start its UK journey in Cambridge because it has the highest concentration of cyclists in the country and is a popular cultural and tourist destination.

The company gathered customer feedback and started to improve its products as a part of its UK localization process. It has already adjusted the bike's design so that it has three gears instead of one and has a smart lock.

"In the UK, the streets are narrower, they are more congested and labor costs are higher. Riders can be heavier, so we've adjusted our business model to suit the market. To provide convenience to our customers, we try to have a bike available every 100 meters," Seal-Driver says.

To address the problem of stolen or vandalized bikes, ofo has organized marshals to regulate their use. It also tracks the bikes by GPS, and if they are locked with private locks, ofo will remove them so the bikes can be used by other customers.

Seal-Driver says advantages enjoyed by ofo are the robust quality of its bikes, its highly efficient app and its good relationship with local government.

"We have a commitment to implement living wages, which are well above the legal minimum, and we have a vision to help cities encourage sightseeing. Our redistribution vehicles are emission free," he says.

Ofo already works with local authorities and businesses to request their permission to put bikes in certain areas that act as hubs.

"For example, we work with the National Health Service in Cambridge, so we put 50 bikes near hospitals. Other locations we use for hubs are university colleges, business parks and train stations, and we offer customer points if they leave their bikes in those areas."

In London, ofo started operating in the borough of Hackney. "We chose Hackney because it is a leading London borough for cycling. In Hackney, 17 percent of the population cycle, compared to an average of 2 percent in London. In addition, it is a borough that champions innovation," he says.

The center of London already has a bike rental program operated by Transport for London and sponsored by Santander Bank. But Seal-Driver says his team is not afraid of the competition.

"Our bikes are simpler and slicker and, as we don't have docking stations, our costs are lower."

In addition, Seal-Driver says ofo believes the Santander bikes do not fully service London's needs. According to ofo's calculation, around 100,000 bikes are needed to satisfy the needs of the city, but there are only around 11,500 Santander bikes.

However, ofo is only one of four smart bike operators competing for London, and the competition could be fierce.

cecily.liu@mail.chinadailyuk.com

(China Daily Africa Weekly 11/17/2017 page30)