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A gobee’s shared bike parked at Ma Tau Chung Road in To Kwa Wan. Photo: Felix Wong
Opinion
The View
by Andrew Kwan
The View
by Andrew Kwan

Look East, young entrepreneurs, for your next big idea

Andrew Kwan

Imagine you are looking for the Next Big Idea to start a company. Where would you look?

Traditionally, the answer has been the Silicon Valley. While this is still very much true, startup entrepreneurs are turning increasingly to China as a source of inspiration.

For a sign of the future, in addition to saying “Look West, Young Woman/Man,” entrepreneurs are now saying “Look East, Young Woman/Man” too.

Bicycle sharing services accessible via smartphones are all the rage in China, with at least 30 such apps across the country’s major and second-tier cities. Photo: SCMP/Eugene Tang
The latest example is none other than the dockless bike sharing phenomenon in China. Public bike sharing programmes in the West have existed for decades. Yet, users of these programmes are often constrained by having to pick up and return bikes to a small set of fixed docking locations, limiting the range of true mobility.

Over the past 3 years, Chinese companies – led by the two unicorns Mobike and Ofo - have reinvented bike sharing.

Today, millions of ordinary Chinese citizens living in cities are enjoying the daily convenience of using a mobile app to find bikes nearby. They can unlock a bike through their smartphone, ride however long they like, drop the bike off wherever they like, and pay through the app when their ride is done for as low as 0.5 yuan (US$0.07).

Valuation of China's sharing-economy
This kind of lightweight mobility is especially useful for last-mile transportation in China, given the country’s sprawling cities where the closest subway station may be another 30-minute walk from home or work.

With consumer adoption comes massive venture capital. To date in 2017 alone, Mobike and Ofo have raised at least US$215 million and US$450 million respectively, not counting investments of undisclosed amounts.

The success of bike sharing in China has inspired entrepreneurs globally to launch similar ventures on their home turf.

Looking to serve the American market, Limebike raised US$12 million in Series A funding led by Andreessen Horowitz, while Spin raised US$8 million in Series A funding led by Grishin Robotics. oBike, based in Singapore, is already expanding beyond the city state into Malaysia for a larger Southeast Asia play.

A rainbow palette of shared bicycles in China. Photo: Reuters
Aiming to address the European market is Gobee Bike, founded by Hong Kong-based French entrepreneur Raphael Cohen. Cohen’s own entrepreneurship journey reflects a transition from looking West to looking East for his big idea.

In 2013, inspired by San Francisco-based HotelTonight, Cohen co-founded HotelQuickly, a last-minute hotel booking app for Asia. With Gobee Bike, his goal now is to spread innovation the other way around by bringing dockless bikes to Europe.

“There are about 1,000 public bike sharing systems around the world with over 1.2 million bikes operating in these systems, 69 per cent of which are outside of China,” Cohen said. “Most systems use docked stations and are hard to scale. We want to bring the dockless model to Europe, so bike sharing can scale without requiring government investments in docking infrastructure.”

For bike sharing startups around the world, the Chinese market not only serves as a reference point of opportunity, it also foretells some of the challenges that these startups could face in other markets.

Illegal parking of bikes – sometimes at the scale of thousands of bikes squeezed and stacked up – is a major headache facing Chinese city planners and regulators.

In addition, while China is promoting bikes as a greener form of transportation, many cities were designed for cars, not bikes. Traffic violations and traffic safety due to spiking bike usage have arisen as issues that planners have to wrestle with.

This picture taken on February 20, 2017 shows an employee of a parking firm putting bicycles from the bike-sharing companies on to a truck in Shanghai. China’s ride-anywhere and park-anywhere bike sharing application is unique in the world. Photo: AFP
The city of San Francisco looked at China as a reference point and passed new laws in March to regulate dockless bike sharing. Attuned to such regulation, Limebike states on its website and mobile app that users have to park their bikes at racks or designated areas.

Meanwhile, China’s sharing economy has gone way beyond bike sharing and well-known verticals like rides and apartments.

The latest phenomenon now is the sharing of mobile phone chargers. One startup is even in the business of basketball sharing, putting basketball lockers courtside where like bike sharing, borrowing starts and payment ends with a mobile app.

For entrepreneurs outside China looking in for the next startup idea, it’s crucial to think through whether an idea may actually thrive given their countries’ local conditions.

Market size of China's key sharing-economy sectors in 2016. Source: State Information Centre.
Anyone who has played or watched a pickup basketball game in America may wonder: Does the problem of no ball on court actually happen frequently enough to justify the existence of a basketball sharing startup?

Wang Jun, who as Managing Director of Decent Capital invested early into Limebike, has an answer to that question. He thinks it’s precisely the willingness of Chinese entrepreneurs to experiment with various concepts, however far-fetched, that makes China so interesting as a startup ecosystem.

“In China, millions of entrepreneurs will continue trying out new ideas,” Wang said. “Tens of thousands of ideas will fail. But the few that get traction can scale up very rapidly and find success. We are in a time of letting millions of entrepreneurs bloom.”

So, do look West, but also look East, young women and young men.

Andrew Kwan is the strategic advisor of CoCoon, a Hong Kong-based entrepreneurship network focused on community building, early stage investments and entrepreneurship education.

This article appeared in the South China Morning Post print edition as: Eastward ahoy for ideas
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