Guangzhou invites bike-rental firms to bid for quotas after 19-month ban

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A collection of Mobikes line the street in Beijing April 9, 2019. (Image credit: TechNode/Cassidy McDonald)

Guangzhou authorities are inviting Chinese bike-rental companies to bring new bicycles into the city, a positive turn for embattled companies following government bans that have lasted for months.

In an announcement released Monday by Guangzhou Transportation Bureau, the city government plans to release a quota totaling 400,000 bicycles to three local companies. Requirements dictate that at least half of the bikes be new, and space procured to store a specified amount of the company’s new bike inventory. The company with the best proposal will secure permission to add 180,000 bikes for a period of three years to end in June 30, 2022. The other two runners-up can introduce 120,000 and 100,000 units, respectively.

Guangzhou government did not unveil a budget in the bid invitation and has authorized a local consulting firm as an agent. A contact person from the company surnamed Zhao told TechNode on Monday that the companies who win the auction will not receive funding, as the bidding is about market access rather than a government contract.

The bidding comes nearly two years after the city government issued an injunction in August 2017 forbidding bike-rental platforms from introducing additional bicycles in the city. At the time, there were over 800,000 bicycles in operation, exceeding the capacity for public facilities management teams of both the government and service providers, reported 21st Century Business Herald citing a local official.

Shanghai and Beijing authorities issued similar bans at around the same time. Shanghai had more than 1.5 million total bicycles and Beijing, 2.35 million bicycles. Other major cities also followed suit, including the eastern Chinese cities of Nanjing and Hangzhou.

Chinese bike-rental startups were investment darlings back then, competing against each other by placing large numbers of bicycles around cities in a bid to expand their market share. This led to “tons” of abandoned bicycles that either were disposed of as trash or recycled, a Shenzhen-based recycling firm told local media (in Chinese).

The number of bicycles have been reduced considerably over the past two years, which is considered one of the main reasons behind the green light by the Guangzhou government this time, according to media reports. Chinese bike-rental firms including Mobike and Hello Transtech immediately expressed their willingness to enter the bidding via public statements.

“The new bidding was the appearance of a welcome to technological innovation from the Guangzhou government, and we believe this will be important to flourish and promote sustainable development of the industry,” (our translation) said Mobike in an announcement provided by the company on Monday.