The USD 589 M fundraising scandal behind China’s straddling bus revealed

The founder of China’s once known high tech transportation solution – the straddling bus dubbed as Batie – was arrested on Sunday for illegal fundraising.

The straddling bus or the Transit Elevated Bus (TEB) was once a popular concept. Huaying Kailai, the company which invested in the bus, said that it was a significant original China invention. TIME praised it as “The 50 Best Inventions of 2010”.

Photo from Sohu.com
Photo from Sohu.com
Photo from Sohu.com
Photo from Sohu.com

The so-called revolutionary transportation invention was aimed at solving city traffic problems. In May 2010, Batie came into public view at the 13th Beijing International High Tech Expo. It claimed that each vehicle could carry 1,200 passengers to reduce 25 to 30 percent of the main road congestion. It also claimed that the time taken for construction of the bus was about one-third the period of a subway construction, and would only cost one-tenth of subway construction costs. Thereafter, it garnered the attention of several international media outlets including BBC, CNN, CNBC which reported on it. The world had seen the project as a potential solution to solve mega city traffic jams.

According to public reports, Huaying Kailai sold a series of financial products in order to raise funds for Batie. The lowest price of its financial product was sold at RMB 1 million (USD 147,267) with an annual return rate of 12 percent. Huaying Kailai raised more than RMB 4 billion in total.

Photo from Sohu.com
Photo from Sohu.com

The public raised questions of Batie being a financial fraud shortly after a quick test run in Qinhuangdao located north of Beijing last August. Soon, the bus’ fake patents were exposed. Last November, state media China Central Television (CCTV) pointed out that Huaying Kailai was suspected of illegal fundraising.

Photo from Sohu.com
Photo from Sohu.com

Bai Zhiming, known as the “father” or founder of the straddling bus, was reported to be under police investigation. According to CCTV, the fundraising fraud sucked more than USD 589 million from 40,000 individual investors.

In end June, the Qinhuangdao government requested for the removal of the straddling bus test line so that the road will return to its normal condition.

(Top photo from Sohu.com)

China’s straddling bus fails as testing rails are removed

China’s elevated straddling bus surprised the world last year with its futuristic design that claimed to be able to solve the nightmarish mega traffic jams in China’s urban cities. The lifted passenger compartment is designed to glide over traffic so that cars can move beneath it.

The Transit Elevated Bus (TEB) – dubbed Batie – underwent a 300-meter road test in Qinghuangdao, a two-hour train ride east of Beijing, in August 2016. The preview obtained some media coverage around the world. Everything seemed so promising.

However, the testing rail of the bus has been removed this week, marking the failure of a seemingly promising company, local media reported on Wednesday.

Batie underwent a road test in August 2016. Photo from Baidu images.
Batie underwent a road test in August 2016. Photo from Baidu images.

This did not come as a surprise though. Just a couple of days after the preview last August, Batie faced severe criticism on its practicality and the company’s alleged financial fraud. The state-run Global Times reported that the road test could be a mere stunt, used by its creator to collect money.

Nanfang Metropolis Daily revealed last year that an investment company called “Huaying Kailai” had been raising funds for TEB before the bus’s test run last year. The size of the fund was between RMB 50 to 100 million (USD 7.5 to 15 million), with an expected annualized return of 12 percent.

In March 2016, Huaying Kailai was listed as a “counterfeit company” by Beijing officials. Bai Zhiming, president of Huaying Kailai, is also president of TEB Technology which is the manufacturer of Batie.

Local press reported that Huaying Kailai is facing a debt of about RMB 5 billion (USD 730 million), and in May 2017 the company announced a plan to pay back for the first time. However, its plan could only pay back up to 1 percent.

Batie not only faces financial issues but logistic obstacles as well. Los Angeles Times reported earlier this year that experts have warned that the current height of the bus would rip up trucks that tried to pass beneath.

It is fair to say that the invention itself is spectacular. The bus was listed as one of the “50 best inventions of the year” by Time magazine in 2010. It is a pity that Batie became an economic bubble. After all, the highly populated cities in China do need a cure for the congested traffic.

(Top photo from Baidu images)