(Yicai Global) March 14 -- The rapid development of the shared bicycle market has breathed new life into the bike industry. Some original equipment manufacturers have started trying to raise prices in light of the increasingly clear demand.
The unit price for bikes ordered by Ofo Bicycle Co. in an internet purchase was CNY224 (USD32) at the end of last year, an Artesyn report said. The latest data shows the Beijing-based company paid CNY300 more recently.
The price hike was caused by a lack of upstream raw material. With business in short supply, there is no need for bike makers, especially those with large production capacities and the corresponding bargaining power, to take low contract prices.
Too high of a price following continual increases would result in reduced orders from some bike share firms, supply chain staff indicated.
As demand moving forward is uncertain, factories upped production in a prudent manner -- by increasing working hours when possible, the report said.
The total demand for shared bikes in the whole market was previously estimated to be less than 20 million by Tencent Entrepreneurship. Regardless of what the market supports this year, demand could decline next year.
Factories in the supply chain that recently upped human resources and expanded production capabilities would be greatly affected, and could risk collapse.
Public data showed that, since 2016, the total delivery quantity of shared bicycles exceeded 2 million, which would be nearly 20 million in 2017. In comparison, only 25 million bicycles from the annual capacity of 80 million vehicles in China were needed for domestic market demand.