Beijing replaces Shanghai as city with most international schools - Rupert Hoogewerf

Rupert Hoogewerf

Shanghai lost its top position for international schools in China to Beijing, says The Hurun Education Top International Schools in China 2018, according to Shanghai-based Hurun chief researcher Rupert Hoogewerf in the Pienews. The survey is based on research on 330 professionals at those schools and government agencies.

Pienews:

The Hurun Education Top International Schools in China 2018 surveyed at least 330 school principals, senior teachers, investors, overseas study agents, and even government departments, in China between July and December 2018. 

In the second year of the ranking, Beijing replaced Shanghai as the city with the most international schools on the list, Rupert Hoogewerf, chairman and chief researcher of Hurun Education, highlighted. 

In total, 26 schools in Beijing made the top 100 list, compared to 23 in Shanghai. Last year  the figures were 21 and 26, respectively. 

The top 100 came from 24 cities across Mainland China, and two-thirds of the list came from Beijing, Shanghai, Guangzhou and Shenzhen. 

The proportion of schools included that admit Chinese passport holders rose from 70% to 80% since last year’s ranking – eight of the top 10 schools are able to admit Chinese passport holders, up four from 2017. 

“This ranking is primarily targeted at parents with children in China, helping them to find the most suitable school for their child, teachers already at or looking to work at international schools in China and admission officers of universities looking to recruit students from China,” Hoogewerf said.

More in the Pienews.

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How we help startups using big data - William Bao Bean

William Bao Bean

Enterprise accelerator MOX (mobile only accelerator) let six startups show-case in Singapore last week. William Bao Bean, partner at the Shanghai-based SOSV explains how his network helps to use big data to enhance their chances on a global market, he tells at E27.

E27:

As its name suggests, MOX invests and works with mobile-focused startups to refine their solutions, business models and teams. It also helps them acquire users by connecting them with 167 million smartphone users on its platform, partnering them with brands and telcos, and also via cross-promotion with other apps (in return for revenue share). 

William Bao Bean, General Partner, SOSV, said that MOX helps startups analyse large swaths of market data so they can optimise their localisation and monetisation strategy.

Currently, MOX focuses on India, Indonesian and Philippines-based startups. It is looking to expand to other countries in the region, such as Malaysia and Vietnam, in the near future. 

That said, it is also open to companies that hail from other parts of the world — as long as they have an amazing product to share. At its 5th Demo Day in Singapore today, MOX showcased 6 such mobile startups.

More at E27.

William Bao Bean in action in Singapore

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Running an international operation from Shanghai - William Bao Bean

William Bao Bean

William Bao Bean, managing director of the Shanghai-based Chinaccelarator, tells about his busy week, trying to help foreign startups to enter China and helping Chinese companies to go global. The main problem of his international operation? "You never have a holiday."

William Bao Bean is a speaker at the China Speakers Bureau. Do you need him to speak at your meeting or conference? Do get in touch or fill in our speakers' request form.

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list. 

The Shanghai rules for self-driving cars - Mark Schaub

Mark Schaub

After Beijing Shanghai has become the second city in the race to regulate self-driving cars. Shanghai-based lawyer Mark Schaub compared both regulations and draws from the differences some conclusions for Shanghai, he writes on the China Law Insight.

Mark Schaub:

Hot on the heels of Beijing, Shanghai has become the second city in China to issue road testing regulations for self-driving cars. This is another important momentum for the development of autonomous cars in China following Beijing’s road testing regulations (“Beijing Regulations”) issued late last year. The Shanghai Regulations use the term “intelligent and connected vehicle” (ICV) for self-driving cars. The self-driving cars governed by the Shanghai Regulations cover L3, L4 and L5 vehicles. 

Although the Shanghai Regulations are largely similar to the Beijing Regulations there are some notable differences... 

The release of the Shanghai Regulations is another concrete step in China’s regulating of road testing for self-driving cars. Their release also shows local authorities are seeking to provide sound policy environment to allow for self-driving cars to develop in China. National rules for self-driving car road testing are expected to be released in the near future. 

Unlike the Beijing Regulations, the Shanghai Regulations are valid for 22 months i.e. until 31 December 2019. From this time frame it appears the Shanghai government intends to regulate the self-driving car road testing in a dynamic fashion. 

The Auto industry is a key pillar of Shanghai’s economy. In 2017, the gross industrial output of Shanghai auto industry was RMB 677.4 billion with a year-on-year growth rate of 19.1%. If local governments will support the development of self-driving cars then it can be expected that Shanghai will lead the way. 

On 1 March 2018, SAIC Motor and Nio were the first two carmakers to obtain temporary car plates for test vehicles under the Shanghai Regulations. We expect more carmakers and technology companies will join them on Shanghai’s roads.

More details in the China Law Insight.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Tencent's investment positive for Wanda - Ben Cavender

Ben Cavender

Dalian Wanda Group’s commercial property arm secured a US$5.4 billion investment from a group led by tech giant Tencent Holdings, a major move for the troubled real estate giant, hoping to get a Shanghai IPO, says business analyst Ben Cavender to Reuters.

Reuters:

The 34 billion yuan deal for a 14 percent stake in Wanda Commercial could also help the unit get back on track with a plan to relist in Shanghai after a bold and ultimately expensive decision to withdraw from the Hong Kong exchange in 2016. 

“From Wanda’s perspective it seems a good deal. They’ve overextended with expansions and acquisitions over the last couple of years,” said Ben Cavender, Shanghai-based principal at China Market Research Group, adding that Wanda Commercial had now become a more “attractive mainland IPO candidate”. 

The stake will be bought from existing investors who had been part of the $4.4 billion buyout fund created for Wanda Commercial’s delisting in 2016. Those investors had been promised up to 12 percent annual interest if it failed to relist in Shanghai within two years. 

The Shanghai IPO has, however, been held up by mainland regulatory measures to tighten liquidity in the real estate sector. Wanda said in a statement that with its new investors it was looking to take the unit public “as soon as possible”. 

The Tencent-led group includes major retailer Suning Commerce Group, e-commerce firm JD.com Inc and rival developer Sunac China, which bought some of Wanda’s theme park assets last year. 

“The tech companies are seen as the darlings of China’s emergence as a global superpower. So, reputation-wise I think this is a good move for Wanda,” Cavender said.

More at Reuters. Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Internet giants crush the smaller ones - William Bao Bean

William Bao Bean

Who will survive in the travel industry: the global giants or the local ventures, was a question for William Bao Bean, managing director of the Shanghai-based Chinaccelerator, at the WIT 2017 Conference in Singapore. William, who guided hundreds of startups, believes the big internet firms will crush the small ones, writes WebinTravel.

WebinTravel:

One critical question on everyone’s mind was who would emerge victorious in the online travel market: Local or global players? 

Bean offered a slightly pessimistic view, remarking, “the big is getting bigger and the small are getting crushed,” and citing the example of how Facebook and Google currently control the majority of global advertising; or how payments and e-commerce are now owned or invested in by Tencent and Alibaba. 

He did also add that “travel is insulated,” but nevertheless, its turf will be harder to defend from global players over time. “If they don’t have a short, they’ll use money as a weapon and acquire” businesses that will let them get ahead... 

So, the big are getting bigger, but “they can be quite myopic”. It grants smaller companies and startups with a slim but existent window of opportunity to sneak ahead. But they must also be aware of common pitfalls, to avoid common mistakes that befall many entrepreneurs. 

Bean argued, “the dumbest thing entrepreneurs do” is trust their gut when trying to expand their brand globally from the get go. “You cannot go with your gut, because it will take you in the wrong direction.” 

Instead Bean recommended “focusing on data and trying things,” encouraging “companies to use data to back up their decisions.” He continued, “you will fail, but it will help you to fail faster” and recover sooner.

More in WebinTravel.

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Cross-border startups, guided through the Chinaccelerator - William Bao Bean

William Bao Bean

Crossing borders is challenging for startups. Willliam Bao Bean, managing director of the Chinaccelerator, guides us through their crowded Shanghai offices, and explains this unique collaboration between starting entrepreneurs, governments, companies, while finding a way through massive numbers of interns. He addresses 42 questions on his day job in Shanghai.

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China needs revised traffic laws to push self-driving cars - Mark Schaub

Mark Schaub

When Baidu CEO Robin Li was arrested by Beijing police for sitting in a self-driving car, it was obvious the country needs an update of its traffic laws, just like the US, Australia and several European countries did have. Shanghai-based lawyer Mark Schaub gives at his firm's website an overview of what is needed to support the development of self-driving cars, including testing on public roads and setting standards.

Mark Schaub:

Automated driving road testing is key step to move automated driving vehicles from the theoreticals of the lab to the realities of the market. A number of jurisdictions are taking the lead in this regard. Although, China has made great advances in constructing closed test sites it has not kept pace with others in respect of regulatory rules or guidelines on road testing. 

China may wish to consider the approaches of other jurisdictions when formulating China’s automated driving test regulations in order to lay a good foundation to enable China to become a global leader in development of automated driving vehicles.

More at China Law Insight.

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Booming creativity in China - Jeffrey Towson

Jeffrey Towson

More than a million Chinese graduated over the past years in art and design. Beida business professor Jeffrey Towson visited earlier Oriental DreamWorks and explains at his weblog why creativity is a booming business in China. The best of two world's approach.

Jeffrey Towson:

At ODW’s offices, I interviewed their creative head Peilin Chou and got a tour. Walking around their offices, you could see their animators (they call them artists) working in teams on everything from story ideas to designing the hair and surfacing of various characters. Overall, it’s impressive – but as a finance creature I do find the whole creative process a bit of a mystery. 

My discussion with Chou mostly focused on their creative professionals. I wanted to know where they come from and how they work together to create the animated films. ODW does appear to be producing a level of quality mostly unmatched in China for animation. And the key to this appears to be how they combine young Chinese artists with Hollywood expertise and experience. 

ODW had about 250 staff total, with the creative team having about 150 artists and animators. Their artists were over 90% native Chinese, and mostly trained at China’s art and design schools. The staff overseeing project development were about 50% native Chinese and 50% Chinese-Americans with Hollywood experience. So it’s a hybrid “best of both worlds” approach.

The first major work by ODW was the January 2016 release of Kung Fu Panda 3. It was the top grossing animated movie in China at that time. And it is a compelling example of what world-class movies, made mostly by Chinese talent, can look like. The characters spoke fluent Mandarin and story was full of cultural subtleties that foreign audiences probably missed. The movie stood out as both high quality but also uniquely Chinese. 

Two other people to keep in mind when thinking about ODW are its famous founders. There is Li Ruigang, head of China Media Capital. Li is arguably at the forefront of creative China and has long been a “partner of choice” for Hollywood in China. 

And there is DreamWorks co-founder Jeffrey Katzenberg, who has been consistently ahead of the curve when it comes to China. His launch of Oriental Dreamworks in 2012 was an important first in terms of joint venture studios in China. However, prior to this he was also the person who created Disney’s film Mulan, the first animated movie based on a Chinese character. And prior to that he was the studio executive who approved The Joy Luck Club, the first major Hollywood movie about Chinese-American families. Around the same time, he was also responsible for creating a Disney internship program that brought some of the first Asian-Americans into the Hollywood studio system. 

According to Peilin Chou, “Jeffrey[Katzenberg] has always been a visionary who understood that a great story is a great story. And regardless of the culture, audiences worldwide will tune in for a great story. In addition, he has always had a genuine passion and love for China.” Chou, a Hollywood veteran and now rising star in China, was one of the first four interns selected for Katzenberg’s internship program back in 1994. 

The Chinese education is a big part of this story. I am a professor at Peking University so I do have a reasonable view of the education system. And it is impossible not to notice the huge improvements in students over the past five years. They have become much smarter and more sophisticated. And they are shockingly ambitious. So the idea that there are similar advances in arts and culture is not surprising to me.

More at Jeffrey Towson's weblog.

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Rules for self-driving cars getting up to speed - Mark Schaub

Mark Schaub

Tesla was the latest to announce the building of its car plant in Shanghai, but self-driving and electric cars are making many inroads in China. Shanghai-based lawyer Mark Schaub gives for Lexology an overview of the latest regulations to facilitate this trend. China seems to be late follow the latests developments, but catching up fast, he says.

Mark Schaub:

The scene seems set for rapid technological developments to revolutionize the automotive industry in a way similar to other products such as mobile phones. 

It seems clear that a major trend will be a transition from cars with advanced features to truly smart cars. It is likely that part of this trend will be that smart cars equipped with ADAS will become increasingly popular with the ultimate goal being intelligent automobile technology that allows for fully self-driving cars. This technology will go far beyond computer assisted driving. 

China seems to be aware of both the challenge and the opportunity. “Made in China 2025”[10] includes intelligent Internet-connected cars as a key development goal. Further Made in China 2025 specifies that China will master technologies relating to intelligent assisted driving and establish preliminary autonomous R&D systems and support production systems for intelligent Internet-connected cars by 2020. Beyond this China has also announced its intention to master technologies for automatic driving, establish a complete autonomous R&D system, build a supportive production system and encourage industrial clusters of intelligent Internet-connected cars. All these goals have the overriding ambition of being able to have a fully upgraded, world class Chinese automobile industry by 2025. 

Steps have already been taken in this regard, by way of illustration in 2016 the Ministry of Industry and Information Technology (MIIT) commissioned a system proposal for intelligent Internet-connected cars. This draft has become the standard framework system for industrial discussions and will be issued to the public for comment once the industrial discussions have been completed.[11] 

Another example of China taking measures is that in July 2016, the National Technical Committee of Auto Standardization (NTCAS) issued the Notice of Conducting Surveys as to the Applicability of Mandatory Vehicle Standards for Intelligent Internet-Connected Cars (2016 NTCAS Notice). Of particular interest is that NTCAS sets in place a review of existing vehicle standards and relevant laws and regulations in China in order to identify how such regulations need to be adjusted so as to avoid restricting the implementation of such new technologies and also to create solutions to enable ADAS and automated driving technologies to be adopted in the marketplace. 

Another important measure is the China Automotive Technology and Research Center initiated China-New Car Assessment Program (C-NCAP). This program ensures that active safety measures are incorporated into the assessment system. On January 12, 2017, the official website of C-NCAP issued the draft C-NCAP Administration Rules (2018) for comment. This is another step by China that shows the increased importance placed on active safety, including AEB and will facilitate the development of ADAS in China. 

As mentioned above, one issue retarding the growth of ADAS in China is that the automotive refitting market for ADAS is currently conducted on a semi-underground basis due to unclear interpretation and enforcement of regulations. 

This issue has not gone unnoticed by the industry which has called for amendments to offending laws and regulations. The Automobile Refitting Committee of the Chamber of Automobile and Motorcycle Auxiliary Products, which is affiliated to All-China Federation of Industry and Commerce, has proposed enacting Administrative Measures for Refitting of Motor Vehicles in 2013 and 2015. These proposals have received responses from MIIT, Ministry of Public Security and other ministries[12]. It is expected that the Chinese automotive refitting industry will be governed by new regulations in the near future – this bringing of the industry out of the semi-underground will promote further sustainable growth in the Chinese automotive refitting industry and this will naturally flow on to the ADAS industry. 

The Chinese authorities’ attention to the development of the smart car in China can also be seen in the joint issuing in April 2017 of the Auto Industry Mid and Long Term Planning. This plan was jointly issued by powerful departments such as MIIT, National Development and Reform Commission and Ministry of Science and Technology. The plan stresses that China will strengthen its efforts in the break-through key technologies in respect on intelligent and Internet-connected cars and will also take various measures to foster such developments. These measures include organizing pilot areas, improving testing and assessment systems and updating laws and regulations. In addition, under this initiative, by 2020, the inclusion of DA (Driver Assistance), PA (Partial Automatic Driving) and CA (Conditional Automatic Driving) systems for new cars is slated to exceed 50% and inclusion of Networking Driver Assistance System are expected to reach 10%. The Networking Driving Assistance System will also lead towards the goal of developing intelligent transportation cities. By 2025, the inclusion of DA, PA and CA systems on new cars will reach 80% and 25% of these cars will be considered substantially or fully automatic driving cars.

Much more in Lexology.

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Who will be the Disney of China? - Jeffrey Towson

Jeffrey Towson

Entertainment parks are becoming big business in China, but there are at least three players trying to come the Disney of China, including Disney itself. Who will be the real Disney of China, wonders Beida business professor Jeffrey Towson on his weblog.

Jeffrey Towson:

The takeaway here is that while Disney’s dream is capturing the Chinese market, that is not the objective of the government, which is actively operating in this sector as both policeman and player. They are focused on the development of an entertainment industry in Shanghai. 

And while the government needs Disney today, it is worth keeping in mind this will not always be the case. 

Finally, well-funded locals, like Wanda and Alibaba Pictures, are now giving chase. This force is the most worrisome. 

Disney is off and running in China. But so are well-funded local competitors. Dalian Wanda Group clearly wants to be the “Disney of China” and has come out with guns and press releases blazing. They are opening multiple theme parks and are the largest owner of movie theaters in China and the U.S. (and #2 in Australia). They are also actively acquiring in Hollywood. Plus you have Alibaba Pictures, Huayi Brothers and others. The competitive picture is daunting. 

However, lots of rich companies have tried to be Disney in the past and have failed. When Disney entered Europe and Japan, lots of local companies had the same ambition. And for decades, other Hollywood studios have tried to replicate Disney in the US. All have largely failed. It turns out copying Disney is pretty difficult. 

Two companies have arguably had some success: Dreamworks, founded by Jeffrey Katzenberg (who previously ran Disney Animation); and Pixar, run by John Lasseter (purchased by Disney in 2006). You could also perhaps point to Lucasfilm, creator of the “Star Wars” franchise (now owned by Disney as well). But all of these are essentially pure media companies. None have replicated Disney’s combination of animation and theme parks. 

I think this has a lot to do with cash flow. Creating animated (and singing) movies that children love is tricky. It takes years of work for one movie, costs a lot of money and is “hit or miss”. If the movie is a hit, you make lots of money. If not, you probably go bust. The unpredictable cash flow makes funding animated movie development and then building large, expensive theme parks impossible for most all companies. Disney’s advantage is that it already has a stable of popular characters and international operations that create financial scale and stability. 

But even Disney has had trouble being Disney at times. It had great success under Walt Disney but struggled in the 1980s as its movies lost their appeal. And when the movies aren’t hits, the theme parks can suffer. New leadership took over (Eisner and Katzenberg) and a string of successes like “The Little Mermaid” and “Aladdin” followed. Disney again stumbled in the early 2000s until it bought Pixar, which made Steve Jobs the largest Disney shareholder. 

So now Chinese companies are trying to be like Disney in China, which is actually really difficult. Wanda is opening theme parks and starting to make animated movies. We will see if they are more successful than past attempts by cash rich companies. Overall, it is going to be an interesting fight to watch.

More at Jeffrey Towson's website.

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Condoms: not volume but quality is the issue - Shaun Rein

Shaun Rein

Attitudes towards the usage of condoms are changing fast in China, says business analyst Shaun Rein to CNBC. While condoms have always been available, their quality was often doubtful. That opens opportunities for high-end condoms with a good - read: international - reputation.

CNBC:

"Volumes are not expanding but there is massive upgrading," in search of higher quality and a superior feel, said Shaun Rein of China Market Research Group, a consultancy. "This is where the foreign brands definitely have the advantage. Consumers are moving up the value chain." 

Chinese tourists to Japan have been returning home with bundles of condoms and Japanese manufacturers have been ramping up exports to China in recent years following a series of safety scandals that have reduced trust in local brands such as Donless, Double Butterfly and Gobon. 

Last year Shanghai police said they seized 3m locally made condoms manufactured from inferior and in some cases foul-smelling materials, following a 2013 bust of 5m fakes. Counterfeit Chinese condoms have been found as far afield as Ghana and Puerto Rico in recent years. 

Jissbon is a mid-level brand in China, appealing to lower-income workers and students who are wary of local products, said Mr Rein. 

"It's above the Chinese brands," he added. China's young people are having sex earlier, state media reported last year, with the average age of the youngest generation's first sexual experience occurring at 17. 

Ansell's main competitor in China is Reckitt Benckiser, which owns Durex, and has one of its largest factories in the Chinese city of Qingdao. 

More in CNBC.

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Why we prefer Shanghai over Beijing - William Bao Bean

William Bao Bean

The ChinaAccelerator, a tech-focused US$200m fund, picked Shanghai over Beijing, although typically most IT firms started off in Beijing. Shanghai is more international, says managing director William Bao Bean in the Economist. 

The Economist:

Lack of government support is cited as the second-greatest challenge to entrepreneurs globally but it is not an issue in Shanghai. In fact, 85% of the city’s entrepreneurs deem their government “very or somewhat effective,” by far the highest figure globally. “It’s pretty simple,” says William Bao Bean, Partner at SOSV and managing director of Chinaccelerator, a global venture capital firm and China based accelerator. “In China, government support is local and a way to build a tax base.” He considers Shanghai to be among the most aggressive in Asia.  No wonder: in April 2016 the local government announced new regulations that will cover up to RMB6m of venture capital losses in case of a bad investment. 

Although growth has slowed, China is still booming by international standards with GDP increasing at about 6.7% in the first quarter of 2016 and Shanghai offering some advantages compared to other cities in the country. “It is more international than Beijing,” says Mr Bean. For this reason, many companies opt to place their marketing and sales departments in the city and foreign brands often establish their headquarters here. Beijing is home to the majority of R&D initiatives and large domestic players, such as Baidu, Tencent and Alibaba, which means the ecosystem is just stronger there overall. “The reason we chose Shanghai,” says Mr Bean, who runs a tech-focused US$200m fund, “is that it is the most international city in China, both in terms of the level of English spoken but also because our focus is to help Chinese companies go global.”

More in the Economist.

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Shanghai Disney is not yet there - Shaun Rein

Shaun Rein

Shanghai Disney opened with a lot of hype, but the number of visitors fell short of the expectations. The entertainment park is not yet where it wants to be, says business analyst Shaun Rein, although it might still bounce back from its current under-performance, he tells the South China Morning Post.

The South China Morning Post:

Visitor stories so far, widely aired on social media, have also focussed on the 3-4 hour wait for some rides, or attractions shut down early, due to maintenance or overcrowding.

Despite making the experience as Chinese as possible – including Mickey Mouse-shaped braised pig knuckle, Peking Duck pizza, and a Chinese zodiac-inspired garden of Disney characters – Shaun Rein, managing director of China Market Research Group said Disney made a “big mistake” in not better handling long queues, which generated negative word of mouth and have forced consumers to adopt a “wait-and-see attitude”. 

“There’s still pretty good demand, but people [appear to] want to wait six months, 12 months, and even longer until the issues are ironed out,” he said. 

A BNP Paribas report agrees that the negative press on long waits may be why foreigners, too, are have been hesitant to visit “for the time being”. 

But this early performance of arguably China’s most high-profile tourist opening to-date could also prove an ominous reflection of just how hard the industry has reacted to a slowdown in income growth and weakened consumer confidence. 

“Consumers are really double-checking, and triple-checking where they visit. They really want to get the best value,” said Rein. 

He says outbound travel and tourism is 16 times the value compared with a decade ago, but Chinese buyers are now trending away from expensive places such as Europe, and towards “exotic and cheap” places in Southeast Asia, and domestic wilderness locations such as Yunan, Guilin, Qinghai, and Gansu. 

“Domestic tourism is still hot, but Shanghai is not,” he said... 

Rein said Chinese tourism will continue to grow, but people are changing where they want to go, so companies “need to be very agile in what they offer.” 

“But Disney will bounce [back], Disney is fine,” he said.

More in the South China Morning Post.

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Mobike: great service, but no viable business model - Paul Gillis

Paul Gillis

Emerging startup Shanghai Mobike expanded to Beijing, to the delight of its citizens. But while accounting professor Paul Gillis likes and uses their service, he does not see how this VC-financed operation is going to make any money, yet, he writes at this weblog.

Paul Gillis:

Mobike offers bike rentals, something I can use to avoid Beijing’s heavy traffic. Mobike’s app opens to a map that shows me the nearest bikes to me, usually only hundred meters or so away.  I can then reserve the bike, follow the map to find it, scan a QR code on the bike and the bike unlocks itself.  

When I am finished with it I park it anywhere I wish, push a switch to lock it, and get charged 1 yuan per half hour – essentially free.  I paid a depost of 299 yuan using my Wechat pay account – another amazing app. 

Mobike as 10,000 bikes in Shanghai and 3,000 in Beijing and is adding hundreds every day. I have not had a problem finding one in Beijing, although they are scarce during rush hour. 

Mobike is VC funded, and the business model makes no sense to me. Each bike costs 3000 RMB – they are quite sturdy and some complain about the weight and lack of adjustability. At that cost it is estimated that it will take 25 months to recover the cost of each bike if each does four trips a day. That creates an interesting accounting problem. It appears the bikes are impaired as soon as Mobike puts them into service, necessitating a writedown, because the expected discounted future cash flows are significantly lower than the cost to build them. 

I can’t see Mobike doing a successful IPO. Some suggest it may be acquired by one of the ride sharing apps, but that does not make much sense to me either.  I think the business model only becomes viable if they transform the company into a software company and sell services to governments around the world to start their own bike sharing operations. 

Many cities have bike sharing, (Beijing has 50,000 bikes in its program) but they usually use fixed locations and payment can be challenging. Mobike could provide a turnkey solution for cities that want green transportation, and that might be a viable business.

More at ChinaAccountingBlog.

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