New | Foxconn to make smart bicycles for Mobike’s sharing service

Foxconn Technology Group, the world’s largest contract manufacturer of consumer electronics, will become the exclusive assembler of smart bicycles for Mobike, in a venture that aims to double the Chinese bike-sharing company’s annual production capacity to 10 million units.

The joint supply chain, which will raise the annual production capacity by 5.6 million units, will significantly cut assembly and distribution costs globally, according to a statement by the two companies. Foxconn will take a strategic stake in Mobike, the statement said, without divulging financial details.

“In 2017, we aim to enable residents in 100 cities in China and around the world to enjoy our unique and convenient solution of last-mile travel,” said Davis Wang, Mobike’s co-founder and chief executive. “Foxconn is the ideal partner to support these ambitious expansion plans.”

The venture gives Mobike a leg up in grabbing market share against its main competitor Ofo, which is also eyeing an expansion abroad to exploit the better profit margins overseas, amid cut-throat competition at home.

Mobike and Ofo, both based in Beijing, are the two biggest among at least 17 Chinese companies that are now providing Uber-like bicycle sharing services across China, each one accessible via smartphone. That’s more than enough me-too service providers for the market, analysts say, which could mean an industry consolidation is on the way.

“They haven’t figured out what their monetization model is yet,” said Wang Xiaofeng, senior analyst with Forrester Research. “Increasing market size is an easier goal to achieve than monetization. When users number is big enough, the advertising money will come.”