On February 6, Lime, a company started up as a bike-sharing shop, managed to raise $310 million to invest in scooter business, which shows that lots of ready money is available for risky, growth-oriented bets.
Not coincidentally, Uber is also getting into the scooter-rental business by investing in Lime since 2018.
According to Rachel Holt, an Uber vice president, their investment and partnership in Lime is another step towards their vision of becoming a one-stop shop for all transportation needs.
Uber will add Lime motorized scooters to the Uber mobile app, giving consumers another option for getting around cities, especially to and from public transit systems.
Through these moves, we can see Silicon Valley’s enthusiasm for investing in scooter business. But the problem is why scooter startups are suddenly worth billions?
In this post, we are going to dig out the reasons behind “scooter business heat”and try to figure out what role does China play in this billion-worth business.
1. Why is scooter business so popular?
There are many reasons why these scooters have become so popular in the U.S. While many people ride them because they are super fun, others ride them for other reasons. In general, electric scooters have several advantages as follows:
1.1 Environment friendly
Many of those who are concerned about climate control are always scooter supporters. With very little energy, these scooters are able to travel short to medium distances without producing any emission gas.
1.2 Effective transportation
Next, an electric scooter can be an effective means of transportation. Over the years, the designs have been greatly improved, and they are no longer just toys for kids. People use scooters for urban commuting, trips to a library or grocery store, and for kids to go to school or playground.
1.3 Easy to Park and Portable
Since scooters have few wheels, they are also compact, easy to park, and are portable. Small models like kick scooters can be brought just about anywhere. Even somewhat larger models are easy enough to bring indoors to protect them from weather or theft.
They can also be parked just about anywhere that a bicycle can be parked. Ride a scooter to commute or do errands and you will never need to drive around looking for a parking spot.
2. China and the scooter supply chain
The scooter hot in the United States does not seem to have anything to do with China, but in fact, Chinese manufacturers are an important part of the scooter business. Then, we will give you an in-depth analysis of China’s role in the scooter supply chain.
2.1 Ninebot: scooter supplier in China
Ninebot was founded in 2012 and is headquartered in Beijing, China. This company has always been committed to using intelligence to change the way people travel and even the way of life.
In October 2014, Xiaomi, Sequoia and Shunwei Capital jointly invested more than 80 million US dollars in Ninebot, which indicates that Ninebot has become a new member of the Xiaomi ecological chain.
Not just as an ordinary electric scooter assembler, Ninebot has quietly become the largest supplier of electric scooters deployed in American cities.
This little-known manufacturing company is an indispensable supplier to almost all companies trying to take the “Micro-Mobility” vent. “Micro-Mobility” is a concept to change the state of urban traffic by popularizing cheap alternatives to cars and public transportation.
2.2 The scooter supply chain
According to the US technology media Quartz, many people do not know that Xiaomi China has become the leading electric scooter OEM in the United States. Electric vehicles that are supplied by Xiaomi and then branded with American companies appear on the streets.
The “unicorn” company Bird, which shares the field of electric scooters, has already launched a large number of scooters supplied by Xiaomi. According to reports, the company may sign a purchase agreement with Xiaomi to purchase electric scooters worth tens of millions of dollars.
In addition, Bird’s competitor Spin also purchased the electric scooter produced by Xiaomi.
Another large-scale electric scooter manufacturer is Segway/Ninebot, which supplies Lime, and this company has a close relationship with Xiaomi.
2.3 Advantages of China’s supply chain over other countries
There are many advantages when it comes to the supply chain in China. However, all those advantages are determined by the sourcing company one is associated with.
If you are working with a sourcing company you trust and can rely on, then there are many benefits of sourcing from China.
A. One such benefit is that China tends to offer cheaper price compared to other countries.
Even though manufacturing in China has been getting more and more expensive, prices here are still cheaper than what many Western countries would offer for the same products.
At the same time, China is able to create products for a cheaper price and better quality compared to it’s other cheap Asian counterparts. Even though other Asian countries might offer prices lower than Chinese prices, the quality you are able to get from China tends to be higher.
B. Another benefit is that it is relatively faster to make goods in China due to larger factory sizes and the industrial market demand.
For the same price and quality, China can make a good faster than anywhere is Asia just because there are so many factories looking for business and prepared for a challenge.
C. Chinese suppliers are also relatively pliable in terms of adjusting with demands.
There is a lot of flexibility and creativity when it comes to factories here and order can easily be pushed up on late notice.
Furthermore, shipping from China is relatively cheap due to the heavy loads that are constantly shipped worldwide.
3. Problems may occur in the supply chain
Although the scooter market currently has a complete operating model and operating mechanism, many problems are still inevitable.
3.1 Supplier manufacturing defects
In 2018, Lime sent out a disturbing message: some of its equipment has a fire hazard and Lime blamed one of its suppliers, Ninebot, for the manufacturing defect.
Due to various reasons, many traffic accidents caused by scooters have brought about a few deaths, and also caused a wave of concussion, tooth loss and fracture. The lawsuit filed in California last October blamed the damage on the negligence of operators and manufacturers.
This once again rings the bell of the importance for a reliable contract manufacturer who takes safety regulations seriously. Such manufacturers can sometimes be rare resource if you’re looking at the wrong sectors. But don’t worry, feel free to talk to us about your concerns over the supplier, and we have the right resource to help you out.
3.2 Maintenance service provider disagreement
Lime’s recall marks that, to some extent, electric scooters are dangerous toys, but Ninebot believes that responsibility should not be attributed to itself. Three days after Lime’s statement, Ninebot issued a statement denying Lime’s statement and warned users to consider the operator’s safety record.
Ninebot pointed out that Lime has been suggested hiring a more professional company to provide maintenance services, but Lime gave the maintenance job to its own team and claimed that the charger used by Lime was not compatible with Ninebot’s electric scooter, which triggered this problem.
From the disagreement between Ninebot and Lime, it can be seen that the care and maintenance of shared scooters is a very important part. How to find a suitable third-party cooperation company, establish an orderly management system, and form a good cooperation mechanism is the key to your company’s continued development.
Actually, we also offer you excellent service to solve these problems. You can talk to us about your concerns and we will use our resource to help you improve your business performance.
3.3 Single supplier, insufficient productivity
Since most of the electric scooters currently on the US market are sourced from Ninebot and lack more suppliers, there is no way to choose the best product.
However, as the scooter business receives more attention and more suppliers join in the market, this drawback will be effectively alleviated.
That’s all about the current situation of the scooter market. If you are interested in finding the most suitable supplier in China, you are free to contact us for more details.
We, Insight Solutions Global, are always willing to help you out. Reach out to us and see how we can help your reduce risk and cost for your supply chain, and guarantee that you will find the best supplier.