*4.3. A New Round of Market Forces Based on Technological Innovation and the "Death" of the State-Owned Programme*

Starting in late 2015, along with the decrease of private providers in public bicycle programs in Guangzhou and across mainland China, a new round of market attempts in the utilitarian urban cycling field with a new generation of public bicycles occurred in some major Chinese cities. This new round is referred to as the second round of market force attempts. The major difference between the new programs and the old ones is that the new ones do not have bicycle stations, which were necessary for the latter (Figure 3). By adopting new information and Internet technology, users can unlock new public bicycles with their smartphones (There are various ways to lock and unlock new public bicycles with users' smartphones. For instance, some bicycles have QR codes. When users scan a code with a certain app, the bicycle is unlocked. In another category of bicycles, each has a unique number on it. A user can type this number into the app to have the secret key for the coded lock of this bicycle sent to the phone). That is why they are named "Smartphone-Based Sharing-Bicycles" to differentiate them from the first generation of public bicycles.

Therefore, the companies that operate SBSBs programs did not need to build stations and docks, but they did have to launch (helter-skelter) bicycles with GPS modules and information technical units in certain cities on roadsides and in public parking spaces. Then residents could use these bicycles by themselves. Users must install an app on their smartphones and deposit some money (usually approximately RMB300). They can then view all of the locations of available bicycles on the app and go to the nearest one. When the user finishes riding, he/she can leave the bicycle in any public area and lock it. The cost is automatically deducted from the money that the user pre-paid on his/her account linked to the app, and the bicycle is available for other users.

**Figure 3.** SBSBs in Guangzhou (this picture was taken by the first author on 11 February 2017).

As SBSBs do not depend on stations and docks, it enjoys several advantages for attracting investments and expanding. The most obvious one is that the cost of investing and operating greatly decreases, making the rate of return for this business higher than that of the first generation of private providers. More importantly, the companies that operate the new programs are subject to fewer administrative constraints. For these companies, the need to interact with the government is greatly reduced. Traditional governmental station-based constraints, such as land permission, water and electricity management, and advertising management, lost their foundation. Companies enjoy more freedom to operate their businesses.

In fact, if treated as a business model of bicycle rental, SBSBs are similar to public bicycles, not a business with huge profit margins. The price of SBSBs is a little higher compared with public bicycles. They also adopt a step-by-step charging model, and in general, the users need to pay 1 to 1.5 RMB for the first 15 to 30 minutes ride, and 2 to 3 RMB for one hour's ride. This business needs to bear the production cost (about 300 to 1000 RMB for each bike)and operation cost (1000 RMB a year for each bike) of bicycles [56]. As there are some other sources of profit like the interest income from the deposit and advertising revenue, almost all the SBSBs companies cannot make ends meet. That is why almost all the SBSBs companies have been losing money all year round [57]. Nevertheless, what is different between public bicycles and SBSBs is that the latter is linked to and based on smartphones, which could collect personal and travel data. Moreover, as SBSBs are not station-based, the location of the bikes and citizens' travel by them are not fixed as the public bicycles. The "freedom" of the companies makes it possible to collect the "last kilometer" travel data, in other words, citizens' point-to-point travel data, which is regarded by Internet companies as of great commercial value [7]. As such, this business has attracted the attention of investors and grown quickly. In just 1 year, this business has attracted billions in investment and has emerged in several major cities in China (Tables 3 and 4).


**Table 3.** Four Major Chinese Cities' SBSBs Programmes 1.

<sup>1</sup> The source: the authors' experience and observation during the fieldwork, and a public media report on Qdaily (http://www.qdaily.com/articles/35340.html) when the authors accessed it on 18 February 2017. It, however, was unaccusable in 2021. To ensure the authenticity of the information, we confirmed it to two respondents [GZ-03 and GZ-12] who are familiar with what happened that time. The table is made by the authors.



<sup>1</sup> The source: the information in this table is adopted from the on-line public report by Jinlicaijing on TMPOST, https://www.tmtpost.com/ 2538652.html, accessed on 4 August 2021. The table is made by the authours.

> In September 2016, a company called Mobike entered Guangzhou after several months of operating in Shanghai and Beijing. Hundreds of bicycles were brought into the urban area of Guangzhou [53]. After the first round of launches, the company conducted several rounds of additions; by January 2017, there were nearly 90,000 Mobike bicycles in Guangzhou [58]. Following Mobike (Guangzhou, China), several other similar companies also emerged in Guangzhou, such as ofo Bike (Guangzhou, China), Small Ming Bike (Guangzhou, China), and bluegogo (Guangzhou, China). Each of them has launched or plans to launch thousands of public bicycles in the urban area of Guangzhou. The new generation of public bicycles is becoming a hot topic in Guangzhou's socio-political agenda.

> For now (January 2019), these SBSBs companies are private and receive no financial support from the government. They have introduced new features compared to their failed predecessors. First, these companies expand on the meaning of bicycles and urban cycling in their advertisements. In contrast to the previous companies, which focused on describing bicycles as an environmentally friendly traffic mode, the new companies spend a great deal of effort connecting bicycles and cycling to broader meanings, such as "a modern lifestyle", "sharing economy" and "freedom" (For instance, please refer

to some published interviews with the managers/founders of these companies: https: //www.xuexila.com/jieri/qingnianjie/3254806.html, accessed on 4 August 2021 (Mobike), http://mt.sohu.com/20161212/n475646158.shtml, accessed on 4 August 2021 (ofo Bike) and http://tech.163.com/16/1214/07/C87RTK0V00097U7R.html, accessed on 4 August 2021 (bluegogo)). All these companies have announced that they are representing and popularising a fashionable and technical lifestyle rather than just renting bicycles. A sense of fashion is one of the most important elements in the design of bicycles (For instance, please refer to the advertisements posted on the websites of Mobike (http://www.mobike .com/global/, accessed on 20 February 2017) and ofo (http://www.ofo.so/#/, accessed on 4 August 2021)). These companies want the public to know that riding their bicycles is chic and part of a fashionable lifestyle. This is in sharp contrast to the previous meanings, which only emphasized the efficiency and low cost of cycling. This kind of pro-cycling culture construction based on a fashionable lifestyle is similar to what Spinney and Lin explored in the production and economization of cycling culture in Taiwan [13] and also echoed with the cultural meaning added by ICT technologies to "green" transportation [11,12].

Secondly, the SBSBs companies enjoy closer relationships and frequent interactions with the public and civic cycling activists. As these companies have no stations or docks, there is a huge risk that the bicycles may be parked illegally, deliberately damaged, or even stolen. Therefore, these companies develop some kind of communication mechanism based on certain reward measures with the public. For instance, Mobike developed a hunter system by which users can report other users' illegal parking or destructive behavior. In so doing, the reporter is rewarded with credit points and the reported user loses his/her credit points. This user watch system helps companies enforce their rules, save maintenance costs, and increase their profits.

These companies also have close relationships with civic activists. Some managers were in fact pro-cycling civic activists before starting their businesses. For instance, the Guangzhou branch heads of Mobike, bluegogo, and ofo Bike are all personal friends of the leader of a cycling advocacy NGO in Guangzhou. After starting their businesses, they frequently interacted with this NGO and other relevant civic actors. These managers and their staff members attend the workshops and conferences organized by cycling activists, join online discussion groups of civic actors, and provide data to researchers. Civic actors also help these companies by discussing relevant issues online and offline, testing bicycles, providing suggestions, and publishing on their personal websites.

Thirdly, compared with the public bicycle companies, the SBSBs enjoy a different kind of relationship with the government. Unlike the first generation, which was either a regulatory object or semi-branch of the government, the newcomers are trying to be equal partners with the government in dealing with the cycling issue. This change and its potential occurred for two main reasons. Due to the disappearance of stations and docks, these companies suffer fewer administrative and regulative constraints. However, by getting investments from financial markets, they have many more economic resources than the previous generation, which is why they can support themselves on pure market measures rather than relying on governmental subsidies.

As time goes on, however, the SBSBs companies have started to face similar governmental regulations as the first-generation companies did. For instance, in August 2017, Guangzhou Municipal Transportation Commission informed all SBSBs companies in Guangzhou that they were not allowed to launch new bicycles in the city as there have been "too many" sharing bicycles in Guangzhou (For details, refer to http://news.sina.com.cn /o/2017-08-03/doc-ifyitayr8906690.shtml, accessed 30 October 2017). However, compared with their "dead" predecessors, the SBSB companies seem to enjoy more freedom and power to bargain with the local government. For instance, although the launching of new bicycles is forbidden in principle, there are still new sharing bicycles emerging in Guangzhou (For instance, refer to http://tech.163.com/17/1114/17/D37ITUPL00097U7R.html, accessed 16 November 2017). These companies also learned from the failure of the previous generation that they need governmental support, especially from local governments, to

exist and grow. Therefore, at the beginning stage, they focused on the crowded and central areas of Guangzhou, where the government-funded public bicycle programs were relatively absent. By doing this, they avoided direct competition with the government-funded programs. They also tried to convince some local governments that supporting their businesses contributed to promoting urban cycling, consistent with the spirit of the central and provincial governments, without increasing public expenditure. They received some responses. For instance, in December 2016, Haizhu District's government announced it would cooperate with ofo Bike by lining up 1200 parking spaces for new public bicycles in its district [59].

Although the SBSB companies avoided direct competition with the state-owned public bicycle program, the fast extension of them still quickly brought the latter a huge shock. More and more users of the state-owned public bicycle program moved to SBSBs, which made the operating costs and account deficit increase. The state-owned operating firm tried several reform measures in 2017, like updating the facilities, and adjusting the prices and charging methods, etc. However, they produced very little effect. Eventually, this state-owned public bicycle program announced they would be stopping operations on the 15 October 2018, as "The (smartphone-based) sharing-bicycles in our city (Guangzhou) has better met the needs of citizens for their short distance travel" (For more details, refer to https://www.sohu.com/a/259656743\_119778, accessed 4 August 2021).

### **5. Discussion**

#### *5.1. The "Liberation" and Governance Challenge Brought by the Innovation*

Inter-field relations are a vital analytical dimension of the field approach [35,37]. However, how the development of the Internet and the technological innovations based on it have changed and created tension in the cycling field has hardly been investigated. This is an interesting and important dimension as during the transition process the relationship between various actors is also changed. Regarding the public sharing bicycles in Guangzhou, the governmental regulations and policies are guiding by two principles land (and relevant infrastructures) control as the core of the governing logic, and the low-profit (semi-public-transit) mode positioning. This kind of governing logic directly leads to the lack of profitability of this business and transit it into a kind of public welfare that relied on public finance. Therefore, the failure of the market forces in this field is foreseeable.

Nevertheless, certain technological innovations in the Internet business field, such as the smartphone-based electronic lock, GPS, and electronic payment methods, liberate private companies in this field from the above governing logic (Figure 4). The SBSBs companies no longer need to apply to the government for land to construct settled stations and infrastructures. Instead, they use existing dispersive public parking spaces. Hence, the set of regulations/policies based on land control are not suitable for the SBSBs. The adopted innovations not only give the companies more freedom in their operations but also linked them to a wider economic capital market by giving financial investors more confidence in their expected economic and mobile data profits. With the support of the financial market, SBSBs companies have since become active semi-independent actors with increasing influence in the field.

These innovations and the new kind of business around them, however, may also have negative influences on the development of urban cycling. For instance, due to the profit-seeking nature of market forces, the absence of supervision, whether from the government or the public, naturally leads to cutthroat market competition among the involved companies [57]. Many problems in the business have emerged, such as the decline in bicycle quality for cost reduction [56], the excess launching of bicycles, and the lack of bicycle maintenance [18]. In addition, the excessive concern for the public bicycle business and the financial game around it also covers some other important issues related to a bicycle-friendly city [9], such as the lack of cycle tracks and parking spaces in

certain areas [16], road-use regulations and awareness of traffic education for cyclists and motorists.

**Figure 4.** The basic framework of the relation between technical innovations and the governance challenge in the publicbicycle field.

#### *5.2. Capitals and Strategic Actions (Positions and Dispositions)*

The rapid development of the Internet economy in China, especially the smartphonebased economy, provides the soil for growth and a certain learning template for market forces in the cycling field. The success of business in smartphone-based shopping, meal ordering, and taxi booking services in recent years in China has given both entrepreneurs and investors the confidence to step into the cycling field. This tendency is combined with the foundation and market shortage for the utilitarian cycling business within the legacies of the previous periods. This is the basis for the quick growth of the engaging market forces in Guangzhou.

When directly engaging in the urban cycling field, market forces can cause changes in urban cycling and the relationships between different relevant actors regarding the cycling issue using their capital. In the Guangzhou case, the first-generation companies had relatively limited economic resources and relied largely on governmental regulations and policies. The new generation companies have benefitted from technological innovations and the development of the Internet economy, enabling them to get large investments from financial markets. To some extent, the first-generation companies can be considered as "dancers in shackles" (GZ\_05, April 2015) as they were strictly governed and constrained by the government regarding their establishment, daily operations, and profit patterns. The SBSBs companies are gaining increasing independence, are less subject to government constraints, and are capable of conducting relatively independent actions with the huge economic resources they hold. This gives them the potential to become a new category of dominant actors in the future. Thus, shifting from dominated actors to active semiindependent actors is the foundation for engaging market forces to work as institutional entrepreneurs and bring real changes to the field. They also have more potential to run the urban cycling field than civic actors, the public, or the government.

What kind of changes can the engaging market forces cause and how do they encourage others to accept these changes? The power of engaging market forces mainly comes from the economic resources they can accumulate and distribute, especially to address the above-mentioned shortage in the urban cycling system during the Cycling Reduction period. Therefore, providing bicycles with very low rent and investing in certain cycling infrastructures are the basic starting points of engaging market forces regardless of generation. From this point of view, the engaging market forces challenge the traditional dominant position of the government in Guangzhou, as providing economic resources on cycling issues was an important part of the foundation of the government's central and dominant position in the field. The first generation was an initial attempt, as the government strictly constrained its economic resources and methods of accumulating and distributing them. The new generation has found a way to connect with a wider financial market and is less constrained by regulations. Thus, it can invest much more money in providing huge numbers of low-rent bicycles, hiring celebrities for their advertisements, and organizing various events and public activities.

Through these endeavors, engaging private companies enhance influence in the cycling field while weakening the dominant governmental position. The media, the civic cycling activists, and the public all receive certain influences, directly or indirectly, on the understanding and vision of urban cycling in this city. To some extent, besides providing material bicycles and influences, the engaging market forces also fight for power to shape the social and cultural image of cycling in society, which was once reserved for the government. This explains the co-opting of cycling advocates into these companies, as the symbolic resources, social relationships, and public influences of the civic activists contributed to the promotion of these companies' vested interests and instrumental views of cycling.

#### *5.3. Discrepancies within the Field*

Compared to the emerging and dominated marginal actors, the existing and dominant central actor (the government) is more passive and insensitive to the potential influences brought by changes in relevant fields. This can be partially explained by its intention to maintain the current power structure and overall situation in the field. In contrast to the path-dependence literature [60,61], similar to historical sociology, which has indicated the self-reinforcing and reactive sequences in certain periods [62] this study highlights the tensions between the passive and insensitive dispositions of the government and nongovernmental actors' active and sensitive dispositions through their interactions. It also adds the significance of other relevant fields (e.g., technology) and actors (e.g., private companies) to explain the changes in the cycling field. Finally, the discrepancies between dispositions are not a result of the actors' agency alone but are rooted in and shaped by pre-existing circumstances and relational power structures.

In the initial phase, similar to the first generation of market attempts in Guangzhou, market forces maintain a good relationship and even collaborate with the government as a result of their relatively dominated and marginal position. Along with the extension of both market forces and civic actors, the basic divide between them will markedly widen. Their economic capital gives private companies the potential to achieve a semi-independent and even dominant position in the cycling field. They can even enjoy more power in influencing the government than civic cycling activists. The negative consequences of the expansion of private companies also attract some civic actors' worries, vigilance, and criticism. Thus, the government and civic actors are anticipated to react to the constantly expanding changes and tensions caused by market forces.
