China's smart but it's sharing economy is going to start integrating vertically in 2018. With market leaders Mobike and Ofo merging with taxi and ride sharing apps like Didi Chuxing which is the Chinese version of Uber, and it's peers. I'm Pete Sweeney, I'm the Asia editor of Reuter's breaking views.
I'm here in Hong Kong. And I've been following China's bike sharing companies with great interest over the past couple of years. What has people excited about this sector is that, for one thing, it's a genuine Chinese innovation unlike the dock diversions you find in western cities. These Chinese entrepreneurs decided to integrate bikes with cell phones, so you can leave them anywhere and pick them up anywhere.
You just unlock it using your cellphone, you pay using your cellphone. Of course, the problem in China is whenever you have a good idea, you have a sort of hard movement into it. We don't just have two or three companies competing for share in China, we have 30 to 40.
A lot of them, because they're just looking add user bases aren't charging anything at all, so there's been this crippling price war. At the same time, it's been irritating municipalities, because these guys, they've just been dropping bikes everywhere and they've just been stacking up in front of critical areas like hospital entrances where people are climbing over bikes to get in and out.
They clog subway entrances. City governments have had to run trucks around picking these things up and taking them amount to dumps. Some investors in Mobike and Ofo specifically believe the long-term solution is to work out the way ride sharing did which is basically to consolidate completely into a single big player like the way Didi Chuxing dominates the cab-hailing app market.
I don't actually think this is a good idea. For one thing, the politics are bad Mobike and Ofo are invested by Alibaba and Tensa which are both competing. However, there is one kind of merger that makes sense and that is merging the bike shares with the ride sharing.
I predict that Didi will eventually buy Ofo, if not the other way around. That will lead Mobike without an alternative, given there's only one big ride sharing app. But they're going in and looking for other partnerships aligned with ride sharing company that's already underway. So I think in my prediction for 2018 is we're gonna have a greater integration of the smart sharing economy that will help everybody where they need to go a little bit faster.