Exclusive | Cash giveaways for free service: inside China’s bike-sharing battleground

China’s bicycle-sharing applications are rewriting the competition playbook to survive.

Mobike, flushed with US$300 million of 2017 funding by China’s biggest social network operator Tencent Holdings and Singapore’s strategic investor Temasek Holdings, launched an aggressive feature last weekend to grab market share.

The Beijing-based smartphone app launched a location-based lucky draw that offers up to 100 yuan (US$14) of cash rebate to certain users willing to ride its orange-spoked bicycles around the Chinese capital. Some of its bicycles are rented out for free, in a grab for market share.

It’s a page out of the playbook of Didi Chuxing, the dominant Chinese car-sharing app that burned through US$1 billion in annual subsidies for drivers and passengers during its two-year fight for market share, which eventually pushed Uber Technologies out of China.

“The new feature is expected to attract more people to Mobike,” said the company’s spokesperson Huang Xue. “It can also encourage users to ride their bikes from remote areas to high-demand areas” to help the company adjust the placement of its vehicles, and “build a healthy ecosystem,” she said.

The burn is made possible by the flood of venture capital funds seeking the next big thing among China’s budding internet entrepreneurs. Private equity and venture capital funds invested US$80 billion in China’s technology companies last year.