Tough times in the bicycle rental business

Xiao Nangying squeezed off the bus after a long working day in Hangzhou. Too exhausted to walk 20 minutes home in the dark, she borrows a bike from a rental point nearby her stop and gives it back 10 minutes later.

"I can return it at a point in front of my community," said the 26-year-old woman. "There is no worry about it being stolen and it's very convenient."

Large-scale bike rental systems add an efficient option to the transport mix in major Chinese cities, thanks to their fleets of quality bicycles accessible via smart cards and from roadside, self-service docking stations.

The number of rental bicycles in Hangzhou, Zhejiang province, reached 65,000 in April, with more than 2,700 docking stations on street corners, every 300 meters, according to Hangzhou Public Transportation Group.

Last year, public bicycles were used more than 870 million times, of which 90 percent were by residents and migrant workers like Xiao.

"When my friends came to see me, we rented bicycles and went cycling around West Lake Park in Hangzhou," Xiao said.

Like Hangzhou, 60 other cities have adopted public bicycle rental systems. In Wuhan, Hubei province, more than 90,000 bikes are scattered across 1,318 docking stations.

Despite rising awareness of eco-friendly ways of living in cities, the development of public transport, especially bike rental, faces many difficulties.

Low profits

After paying an initial subscription fee, generally about 100 yuan ($16), users can pick up bikes and return them to any docking station in the city. The first hour is free, rising to roughly 1 yuan an hour thereafter.

According to Hangzhou Public Transportation Group, 96 percent of the 870 million times its bikes were used in 2011 were for just an hour. But every month, more than 2,000 bikes go for repair, said a report by Friends of Nature, an environmental NGO.

In many cities, the situation is similar. In Beijing, the revenue from rentals has been limited since the system began in June. "We have hardly made any profit in the past three months. The revenue cannot cover a month's salary for a single worker in our company," said Mu Liang, manager at GoldeNet Communication Technology Beijing, one of the two operators of the city's bicycle rental service.

Some companies have been forced to close due to lack of profits, among them Beijing Fangzhou Public Bicycle Co, formerly the largest bicycle rental firm in Beijing.

The company saw a peak during the Beijing Olympic Games in 2008, and it promised to set up a docking station every 200 meters. But it went bust in April 2010, with a 10 million yuan deficit.

"There were many reasons for its poor performance, one being that only a few residents registered for the service," Zhao Jie, director of traffic for the China Academy of Urban Planning and Design, told China Daily.

"Allowing these companies to put advertisements on bicycles or docking stations is an effective way to increase profits," Zhao said. "It is impossible for a private company to run such a business based purely on social welfare."

By mid-September, about 3,200 smart cards had been issued to residents in Beijing's Chaoyang district, Mu said. Foreigners can also register for a card from October.

In Hangzhou, the operating cost of the public bicycle system is about 60 million yuan. Selling advertising space could cover around half of this cost, according to Friends of Nature.

Shift to cars

As the use of cars has increased across China, bicycle use has declined. The proportion of people cycling in Beijing has dropped to 16 percent, down from 30 percent in 2005.

"I don't ride a bicycle because it is not safe. On many roads there is no specific bicycle lane, which makes me nervous when there is a lot of traffic," said Chen Yang, 24, a student at Beijing Language and Culture University.

"With more public bicycles in service, the government should also spend more effort to tackle traffic violations such as motor vehicles occupying bicycle lanes," Mu said.

The government should implement strict rules to control the increase in cars, said Zhao.

Government departments in many cities have failed to promote the use of bicycles, said Li Bo, a founding member of Friends of Nature.

"Plans for developing the system have not been well implemented," he said.

The way people travel needs to be changed, Zhao added, with public transport encouraged for journeys of less than 5 kilometers.

If the government invests in public transportation, it could create a positive cycle, with more people taking public transport as a result of improvements stimulating even greater investment, he said.

In Hangzhou, the public bicycle network is an integral component of the public transport system, accounting for at least 30 percent of it.

To promote a green and healthy environment, government agencies, including the Ministry of Housing and Urban-Rural Development, have issued goals on walking and public bicycles in the city. Their aim is that by the end of 2015, at least 45 percent of all journeys in the city of more than 10 million should be by foot or bicycle.