January 25, 2018 / 4:38 PM / a month ago

Chinese bike-sharing firms gear up to launch in Mexico

MEXICO CITY (Reuters) - A pair of deep-pocketed Chinese bike-sharing companies are gearing up to launch in Mexico, looking to make their Latin American debut in the country that is home to one of the world’s largest and most congested cities.

Beijing-based Ofo, which has raised more than $1.3 billion in venture capital, is eyeing Mexico City, Guadalajara and Monterrey as it prepares to offer its service in Mexico, said Taylor Bennett, the company’s head of communications for North America.

The company, which counts Chinese e-commerce giant Alibaba as an investor, has not yet set a timetable for the launch, he told Reuters.

Ofo’s chief rival, Mobike, which has raised more than $1 billion, has also set its sights on Mexico. The company is in talks to bring its rental bikes to Mexico City’s affluent Miguel Hidalgo borough, targeting a February launch, according to a person with knowledge of the matter.

A spokesman for Mobike declined to confirm the company’s plans but said it spends time working with local governments before entering new markets.

With their foray into Mexico City the Chinese bike-share companies would be entering a market that already hosts ECOBICI, which is run by the city government and is one of the largest public bike-sharing programs in North America. The Mexican capital is home to nearly 9 million people, with a total of more than 21 million in its metropolitan area.

The city’s transportation secretary referred comment to the environmental secretary, which did not respond to a request for comment. ECOBICI also did not respond to a request for comment.

The Chinese bike-sharing firms’ plans also strengthen the Chinese tech sector’s burgeoning presence in Mexico. Ride-hailing giant Didi Chuxing plans to launch in the country later this year, Reuters has reported.

TRAFFIC AND POLLUTION

Mexico City, with its traffic-choked streets and poor air quality, has proved a prime target for tech companies aiming to remake transportation. Ride-hailing company Uber Technologies Inc chose Mexico City for its first entry into Latin America, and the city remains its third-biggest market worldwide.

Ofo is also preparing to offer its by-the hour rental service in Canada, with Toronto as its top choice, Bennett said.

“Our approach is really collaborative, and what we try to do is really build from scratch the bike-sharing program that works for cities,” he said. “That’s where we are now with Mexico.”

ECOBICI, which launched in 2010 and has grown to include more than 6,000 bikes at more than 450 stations, has found a strong following among Mexico City residents. The city closes off miles of streets every weekend for cyclists.

The companies that popularized their services in China are seeking to avoid problems that emerged there. Piles of bikes littered Beijing sidewalks, and the market became crowded as startups rushed in.

In November, the country’s third-largest bike-sharing company, Bluegogo, said it was going out of business, with the firm’s chief executive writing in a public letter that the market had become a “bubble.”

With newcomers entering the bike-share market, Mexico City needs thoughtful regulation and rules that are consistent across the city and that respect pedestrians’ rights, said Ivan De la Lanza, who manages pedestrian and bike projects at the think tank World Resources Institute and who previously directed bike programs in the city’s government.

Despite the popularity of ECOBICI, private bike-sharing companies such as Ofo and Mobike tend to complement government programs, rather than compete with them, said Paul DeMaio, a principal at MetroBike, a bike-sharing consultancy.

The Chinese firms’ arrival in Mexico City “could be an opportunity for the city and for the private sector ... to provide service city-wide,” he said. “It’s a huge city.”

Reporting by Julia Love; Editing by Frank Jack Daniel and Frances Kerry

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