Segway's Second Chance in China
Segways are a revolutionary mode of transportation embraced by mall cops and helmeted tourists, but seemingly very few others. Some cities have banned them. A U.S. president has toppled off of one. And in 2010 the company’s (then) owner accidentally drove his off a cliff. Yet despite these setbacks, and sales that have never approached expectations, Ninebot, a Chinese Segway competitor, announced last week that it was purchasing Segway for an undisclosed sum.
The sale marks a second chance for Segway. In a different way, it also marks a second chance for Chinese commuters.
China is in desperate need of the sort of transportation revolution that Segways once promised. Rapid urbanization, an explosion in the number of automobiles, and a failure to build roads and highways fast enough to meet ever-increasing demand have made China home to some of the world’s worst traffic. In 2011, investment firm UBS published data on the average speed of traffic in five Chinese cities. Beijing averaged 7.5 miles per hour. Only one, Wuhan, with average speeds of 12.7 miles per hour, exceeded that of a Segway’s basic model at its top speed of 12.5 mph.
At one time, of course, Beijing and the rest of China was a bicycle-based society. But those days are long gone, victim of a state-run industrial policy that has subsidized the development of a massive Chinese automobile industry, and urban planning that has actively eliminated bike-friendly lanes in favor of more space for cars. Meanwhile, upwardly mobile Chinese have rejected the bike as a commuting relic of the past; they want something quicker, and more modern.
Mass transit is one answer. But, amid China's breakneck urbanization, it's nearly impossible for the government to provide transit infrastructure sufficient to satisfy the public's demand. In Shanghai, home to the world’s longest subway system, and Beijing, where the system exceeds London’s, waiting times to enter stations during morning rush hour are often longer than commutes (I’ve seen 30 minute waits), and key transfer hubs are dangerously overcrowded.
When it comes to commuting in China, the most popular alternative to a car (which many Chinese still cannot afford) or a subway, is the battery-powered electric bicycle, which retails for as little as a few hundred dollars. Slower than a car (they typically operate between 20 and 30 mph), but faster and less sweat-inducing than a human-powered bicycle, the e-bike is a sensible and affordable option for China’s chaotic roads, especially when riders travel in packs. According to Chinese media, there were 200 million of them on Chinese roads as of 2013.
Segways can make a play for that market. Ninebot co-founder Wang Ye says the Chinese public will quickly appreciate that Segways have huge advantages on electric bicycles and cars: “They’re more portable, you can bring them indoors, you don’t have to worry about parking, and they won’t get stolen.” And there's reason to believe that Chinese consumers will find the devices to be stylish. Last year, electric scooter companies (skateboards with battery powered motors and handlebars) shipped 30 million units in China.
And while Segway was struggling in the United States, Segway knock-offs were quietly finding an audience -- and cachet -- in China. Law enforcement and the military were the first to embrace the devices, and these days they’re common enough (especially in Tiananmen Square) that nobody turns their head when an officer wheels by on an electric chariot. Airports, restaurants, amusement parks, and other entertainment venues have embraced them as efficient and novel ways to move staff. Tourist destinations, such as beaches, offer them as popular rentals. Today, a search for “Segway” on Alibaba returns 272 pages of Segway-like devices, including several made by Ninebot which -- prior to its acquisition of Segway -- was accused by Segway of being one of several Chinese firms that have stolen its patents.
Now Ninebot owns those patents, and the Segway name. The acquisitions perfectly position the company to not only grow with, but lead the development of China’s world-beating small electric vehicle market. If that happens, Segway’s many critics might soon find the joke is on them.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Adam Minter at email@example.com
To contact the editor on this story:
Cameron Abadi at firstname.lastname@example.org